EQUITABLE LIFE INQUIRY

Resolved,
	That there should be laid before this House a Return of the Report of the Equitable Life Inquiry, conducted by the Right Honourable Lord Penrose.—[Mr. Kemp.]

Oral Answers to Questions

CULTURE, MEDIA AND SPORT

The Secretary of State was asked—

Sports Facilities (Funding)

David Amess: If she will make a statement on the funding of sports facilities from lottery funds.

Richard Caborn: Lottery funding continues to transform sports provision, but, as everybody knows, receipts are falling, so the Government are reforming Sport England to ensure that lottery money is most effectively used. Facilities and other funding will be based on sport's own priorities and have a true regional focus. The driving force for that will be greater sustainable participation in sport and physical activities.

David Amess: For too long, my constituency of Southend, West has languished in the bottom group of beneficiaries from lottery funds, despite the excellent quality of the many applications that have been made. Will the Minister explain why, two years ago, the Government indicated that £750 million from the New Opportunities Fund would be fast-tracked to sport, yet only £230 million has found its way to our schools, of which only £8.5 million has actually been spent?

Richard Caborn: Under the six-year programme, £581 million of the £750 million is to be invested, through local education authorities, in sports facilities. We are the first to admit that, had Sport England been up to it—unfortunately, it was not—we should have invested through that medium. Over the past two years, I have been engaged in the reform programme for Sport England, which will work through the governing bodies and the new regional sports boards; the 75 local and regional funding streams have been transformed and the process will be much more bottom-up, influenced by sport, as well as by people in the regions and in the governing bodies.

John Cryer: The Minister may be aware that my Hornchurch constituency has done extremely badly from lottery funding for the kind of facilities referred to in the question. Will he give an assurance that future bids from Hornchurch and from the London borough of Havering will be looked at fairly and, preferably, approved?

Richard Caborn: Overall, the Department and the distributors have been trying to ensure that lottery funding is much more sensitive to local needs and that distribution is fairer. As I said in my previous answer, sports governing bodies and the regional sports boards will be the major distributors of the money, to ensure that we respond to the needs of sport and of community development. Sport England will be the community platform from which schemes will be developed.

Nick Hawkins: Does not the Minister recognise that the Government have removed sport's legitimate expectations from the lottery? When they took office, they reduced the proportion of lottery money going to sport, but made sure that lottery money went to many unpopular causes, including the National Coalition of Anti-Deportation Campaigns. As a result, there has been much less lottery money for sport, and the Minister's answer to my hon. Friend the Member for Southend, West (Mr. Amess), who pointed out that only £8 million of the £750 million promised three years ago has been spent, shows that the Government have no idea about joined-up thinking. The money that sport was led to expect it would get is tied up in red tape in the Department for Education and Skills. It should have been given to Sport England and delivered to sport—the Government have broken their promise.

Richard Caborn: When the hon. Gentleman reflects on his question, he will find that it has many contradictions. Sport England receives 16.7 per cent. of lottery funds and the New Opportunities Fund receives about 33 per cent. A considerable amount of that money has been invested in sport. The £750 million for local education authorities to which the hon. Gentleman refers is actually going into sports facilities—

Nick Hawkins: It is not getting there.

Richard Caborn: It certainly is getting there. The hon. Gentleman should have been in the constituency of my hon. Friend the Member for Elmet (Colin Burgon) last Friday and seen the all-weather pitches and the developments for tennis and basketball in Dronfield, just outside Sheffield. Over the next 18 months to two years, 1,700 schemes will be coming on stream as a result of New Opportunities Fund investment in new sports facilities.

Lindsay Hoyle: Will my right hon. Friend ensure that better funding is spread throughout the north-west? In Chorley, we have a very good athletics club but a running track is much needed. How much funding can be made available through Sport England for that scheme?

Richard Caborn: When I took this job, we had 75 different funding streams. We have acted in an adult way and taken a systematic approach, involving those responsible for sport—the governing bodies—and the new sports boards, which have a much wider constituency than had previously been the case, and the funding will be invested strategically and systematically. I am sure that my hon. Friend will make strong representations to Andy Worthington, the chair of the new north-west regional sports board, who will listen to the case so as to ensure that the scheme is delivered within the time scale that my hon. Friend wants.

James Gray: At the Labour party conference in September 2000—some four years ago—the Prime Minister said:
	"Today we set out plans to invest £750 million"
	in
	"three years".
	By anyone's standards, the Labour party conference in 2000, plus three, gives 2003 and £750 million. In 2002, the Minister said in a very fine speech that he once made:
	"I want"
	it to happen
	"by the summer."—[Official Report, 1 March 2002; Vol. 380, c. 999.]
	However, in a written answer in the House of Lords on 8 January this year, the Government were forced to admit that they had allocated £750 million, that they had so far committed £230 million, but that only £8 million had been spent, despite the Prime Minister's promise in 2000. When will he start putting his money where his mouth is?

Richard Caborn: I am not taking lectures from that lot opposite, who were closing 40 playing fields a month when we came to power and had no sports strategy at all. We are spending £750 million, but we happen to be just a little bit behind schedule, so it is a bit rich of Conservative Members to criticise us.

Dennis Skinner: The Minister should not worry too much about the Tories, who gave £13 million towards the Churchill papers. I want to draw his attention back to the baths at Bolsover. I know that he is dealing with Chorley, Sheffield and all those other places, but will he give me an assurance about the proposal to save the baths at Bolsover—a declining area following the pit closures? The last bath was closed because of subsidence. We have got a first-class case. Do not bother about that lot over there—bother about Bolsover.

Richard Caborn: I assure my hon. Friend that the east midlands sport board will take on board his interesting point. Many of the sports facilities in his constituency and, indeed, in those of many of my other hon. Friends were developed through the pits and the big steelworks. Many of those facilities were lost, but, as my hon. Friend suggests, we are trying to bring them back into community use. In fact, that investment in the community is governed by the community. I will take what he says to the east midlands sports board, and we will discuss it again.

Football

Colin Burgon: What plans she has to meet football representative bodies to discuss player behaviour.

Richard Caborn: I have no such plans at present. Players' behaviour is primarily a matter for the football authorities, but the Government invest substantially in football's development and do not wish poor behaviour to be imitated. I have discussed the issue in the past with those in the sport. Indeed, I wrote to all football clubs at the beginning of the 2002 season, drawing their attention to what teachers have been telling me as I have gone around the country: that what happens on the pitch on a Saturday is copied in the playgrounds on the Monday. I believe that professional players of all sport, but particularly of football—our national game—should take that advice from this country's teachers.

Colin Burgon: I thank the Minister for that reply. I know that he shares my sadness about the regular reports of the behaviour of a significant number of professional footballers over the past year or so, but I want to be positive about the game. When he meets the football authorities will he use his influence to promote the idea of a John Charles fair play award at either national or European level? The Minister, as a Sheffield United supporter, knows a bit about football. John Charles of Leeds United and Wales was never sent off or booked in his career. In many respects, he represents the age of innocence for our national game. What support can the Minister give to all those of us who want John Charles's memory to be honoured properly?

Richard Caborn: All hon. Members recognise the contribution that John Charles made to football. I know that my hon. Friend is a Leeds supporter and that John Charles played for that team for eight or nine years and was an outstanding footballer who graced many pitches at national and international level. My hon. Friend's suggestion about a fair play award is made at an appropriate time in the development of football in this country. A fair play award, using John Charles's name, is a good proposition—it could probably do a lot—and I will take it up with the national and international football authorities, as John Charles was noted internationally for the way he played the game.

Derek Conway: Will the Minister also take time to encourage clubs, such as Charlton Athletic, that do a great deal for schools and whose younger players do a great deal of community work to offset the image of those who are more interested in nightclubbing and floosies? They do a great deal to encourage young children in community schools to take a proper interest in the sport.

Richard Caborn: I could not agree more with those sentiments. Unfortunately, a minority—it is a minority—of footballers misbehave, but every football club in the premier league and the first division is part of the playing for success initiative, which brings young people into centres to learn about information technology and uses the power of football to attract young people to learning and being good citizens. We must commend what football has been doing; it is unfortunate that it gets only bad publicity, as it has in the recent past.

Jonathan R Shaw: Does my right hon. Friend agree that sport is a channel for positive behaviour and that we need facilities for sport to take place? If so, he will understand my dismay at the fact that the £15 million scout centre at Bucknall Park in my constituency is still closed. Will he use his good offices—

Mr. Speaker: Order. I did not call the hon. Gentleman on Question 1. He cannot try again on Question 2.

Television Licences

Alistair Carmichael: What rights of entry the TV Licensing Authority has into households that do not have a TV licence.

Tessa Jowell: TV Licensing officers may enter a person's home only with their consent or under a warrant issued by a justice of the peace, or, in Scotland, a sheriff. Such a warrant may be issued only if there is reasonable ground for suspecting an offence related to the installation or use of a television receiver.

Alistair Carmichael: I thank the Secretary of State for that answer. I wonder whether she would be good enough to remind TV Licensing of the extent of its powers, because I am sure that I cannot be the only hon. Member to receive complaints from constituents who do not have a television set, but who feel bullied and harassed by its actions and feel that they are being made to prove the negative?

Tessa Jowell: I am aware of the hon. Gentleman's concerns, which he has pursued with my Department on behalf of his constituents. TV Licensing is independent of Government and is run by the BBC, but I am aware of the concerns expressed by a number of hon. Members about the tone of some of its correspondence and think it right to draw that to the attention of the BBC. It is, of course, yet another issue that will be considered in the context of the charter review.

Gerald Kaufman: Will my right hon. Friend call on the BBC to desist from the odious licensing campaign that it is conducting, in which it implies, regardless of the Data Protection Act 1998, that it is able to snoop on every household in the country and threatens people with the repulsive slogan, "Get one or get done" and the prospect of a huge fine or a prison sentence? Will she make it clear to the BBC that if it conducts a campaign with menaces and threats of that kind, using licence payers' money to do so, more and more people will believe that there ought not to be a licence at all?

Tessa Jowell: I am well aware of my right hon. Friend's interest in that matter. He has raised it with me before, but I will not intervene in the way he proposes. TV licence evasion costs about £200 million a year. I understand that not just this campaign but previous campaigns have more than paid for themselves in catching offenders but, of course, it is right that any such campaign is proportionate and is operated within the law and acts sensitively in relation to people who are most vulnerable. Although only 2 per cent. of the population have no television sets, I know that the cases that have been pursued—arguably too vigorously—have caused distress. That is wrong.

Tim Boswell: Does not the Secretary of State feel just a twinge of social conscience when, despite the carefully planned and considered progressive escalation in the stridency of communications from the licensing authority, the outcome is still a significant loss of revenue, to which she referred, and about 150,000 prosecutions a year for licensing offences at considerable public expense, with a high proportion of those summoned being single parents?

Tessa Jowell: The number of people pursued for licence evasion has fallen over the past 10 or 12 years. That is good, because failure to pay for television licences has a direct cost on the BBC and its quality of programming. The hon. Gentleman must accept that he cannot, on the one hand, accuse the Government of unwarranted interference in the BBC, yet, on the other, make the kind of claims that he does. It is incumbent on the BBC to run the operation in a way that is sensitive, consistent with the law and effective in ensuring that people discharge their responsibilities and pay for their TV licences.

Bob Blizzard: Is the TV licence fee not just in effect a poll tax—flat rate and unfair? In a digital age with hundreds of channels, is it not looking increasingly like an anachronism? Does my right hon. Friend agree that the best way forward would be to abolish the licence fee and fund the genuine public service broadcasting provided by the BBC that is not on other channels through progressive taxation?

Tessa Jowell: My hon. Friend makes an interesting contribution to the broader charter review debate, and full account of it will be taken at that time.

John Redwood: Does the Secretary of State agree that, given the obvious anguish among Labour Members caused by the continued hated poll tax, it would be wise of her seriously to consider other ways of financing the BBC and show that the Government, on this occasion, want a sensible modernisation of something that is causing such distress to those without televisions, those on low incomes and those on her Back Benches?

Tessa Jowell: Responsibility for the hated poll tax sits on that side of the Chamber, not on this one. As I have said on many occasions, the debate about the future of the licence fee is part of the full and vigorous debate being held as part of the charter review. I have also made it clear that a better alternative to the licence fee must be devised before it can be replaced.

Film Industry

John Barrett: If she will make a statement on the level of support for the British film industry.

Estelle Morris: In 2003–04, the Department provided grant-in-aid funding of £24.11 million to the UK Film Council. By the end of January, the council had also received £21.53 million of lottery funding this financial year. In addition, the Government continue to make available significant tax relief for film makers, in practice providing them with up to 15 per cent. of the budget of individual films.

John Barrett: I thank the Minister for that answer, but what can be done to encourage film production in this country, especially following the announcement on 10 February that threw into confusion the funding of several films in the pipeline? Will she put pressure on the Treasury to introduce transitional arrangements to ensure that those films are funded in the UK and not abroad?

Estelle Morris: Significant help—up to 15 per cent. of the cost of the film—remains available through the tax system for people producing films in this country. That represents a significant investment of taxpayers' money, and it will continue. I am grateful for the opportunity to clarify that, because much has been written about the demise of support through the tax system, but that is not the case. The Treasury is absolutely right to close tax loopholes. It sends a message to film makers that, as the Chancellor made clear, the Government will continue to support them, but that we will act in the interest of taxpayers and ensure that tax loopholes are closed.

Tom Clarke: The film industry accepts what my right hon. Friend says about the Treasury closing loopholes and about the exploitation that was occurring when it took the decision on 10 February. Notwithstanding that, does she agree that it is important that she shows every support for film production studios and post-production infrastructure—before any statement that the Chancellor might make next week—to confirm the Government's commitment to the renaissance of the British film industry, which has been such a success so far?

Estelle Morris: I acknowledge the part played by my right hon. Friend in the Government's contribution to the film industry since 1997. He is right to say what he does. I have not met one person in the industry who has said that the Government were wrong to close that loophole. There is widespread approval of that. I accept that, if contracts had not been signed and filming had not begun, some people were put in a difficult position, but it was right to close the loophole.
	The investment that the UK Film Council is making to ensure that we have the necessary range of skills, to which my right hon. Friend referred, is also important for the future of the British film industry. Record investment was made in UK films last year. I believe that that will continue, and the Government are taking action to ensure that it does.

Mark Field: Members have referred to the tax loophole closed on 10 February. The concern of the film business is the suddenness of the change. What representations did the Minister make to the Treasury in advance of 10 February, or can we assume that it was as much of a surprise for her as it was for everyone in the British film business?

Estelle Morris: The minute a Government start giving notice that they are about to close a tax loophole is the minute everyone who wants to shelter income takes advantage of the loophole. There is nothing unusual about the way in which the Inland Revenue acted. If there is a tax loophole, it closes it without warning to safeguard British taxpayers' money. More than £100 million was saved by closing that tax loophole. Hon. Members should congratulate the Government on ensuring that that money was saved. Some people at the edges got hurt, but film makers who had signed contracts and films that had started filming were allowed to continue, receiving the money from the UK taxpayer. Indeed, the legitimate tax breaks in sections 42 and 48 apply and they will continue to do so.

Julie Kirkbride: The Minister is well aware of the tax reliefs available to the film industry, not least section 42, introduced by the last Conservative Government, which has been enormously successful in boosting the British film industry. She is also aware of the tax reliefs introduced by her Government, which were withdrawn overnight on 10 February in a Treasury press release. Does she recognise the crisis of confidence that has been created for international investors in the British film industry by the overnight withdrawal of those tax reliefs? What representations is she making to the Treasury to ensure that new tax reliefs will be introduced in next week's Budget that are stable, long term and do something to boost investor confidence in the great British success story of the British film industry?

Estelle Morris: That was the most disgraceful statement I have heard from anyone who claims to have an interest in the UK film industry. There was no overnight closure of the tax support to films. Both sections 42 and 48 apply and they will continue to do so. Some £300 million a year is given as relief through section 48. The tax relief that her Government introduced is worth £70 million: good though it is, it is nothing like the section 48 relief, which supports UK film to the tune of £300 million a year.
	For the hon. Lady to stand at the Dispatch Box and criticise the Inland Revenue for closing a tax loophole overnight shows a total disregard for taxpayers' money. Again, I make it clear that the tax relief continues and, again, I make it clear that the Government will continue to act to ensure that money is preserved. The hon. Lady is shadow spokesman for a party that has promised to freeze my Department's budget. Were it to gain power and implement its £78 million cut in the Department of Culture, Media and Sport budget, I wonder how long the film industry would continue to be supported.

Sport/Fitness Training

Linda Perham: What steps her Department is taking to promote better health through sport and fitness training.

Richard Caborn: The key objective of the Government's investment in sport and physical activity is, indeed, to improve the health of the nation. The activity co-ordination team, which I chair jointly with the Under-Secretary of State for Health, my hon. Friend the Member for Welwyn Hatfield (Miss Johnson), who is responsible for public health, is also preparing a three-year delivery plan on sport and physical activity. I hope that the paper will be published shortly.

Linda Perham: I thank the Minister for that information. Given that participation in sport and fitness activity in the UK is low among the adult population, does he agree that right hon. and hon. Members should lead by example, perhaps by joining the excellent Westminster Gym, which has helpful, professional and friendly staff who can assist Members in getting fit to fight for their constituents?

Richard Caborn: I saw you, Mr. Speaker, smile at that question. Many of us could do with a good dose of the gym. My hon. Friend is right: we have an excellent gym in the House of Commons, and it can be recommended to many in the House who might wish to join it. About 10 weeks ago, my hon. Friend and my right hon. Friend the Home Secretary introduced in the gym facilities and equipment for disabled people. More disabled people are using fitness suites and there is acceptance of disabled people in that area of operations. That has happened in the House of Commons gym. I commend what my hon. Friend says.

Don Foster: Given the look that the Minister gave me only a few seconds ago, I should tell him that at 7 o'clock this morning I was in the gym.
	The Minister tells us that the delivery plan is due shortly. Will it be based on the current active participation target of 70 per cent. to be achieved by 2020? The figures show clearly that it will not be achieved until 2042. The Wanless report said that it was nonsense and Sport England has effectively dismissed it. What action will the Government take? Will they scrap the target, as they have done with the child participation in sports target, or will we see real action to achieve a target that currently there is no sign of the Department meeting?

Richard Caborn: The target still stands. I know that the hon. Gentleman will agree that we are trying to ensure that our nation becomes much more active. About 30 years ago, a child took part in 70 per cent. more physical activity than a child does today. That illustrates the real problem. Wanless clearly said that it is not that we are absorbing more calories but that we are engaging in considerably less activity. That poses a challenge to many. Architects, for example, should ensure that they incorporate stairways in their designs. Town planners should understand that it is desirable for pedestrian walkways to be a feature of their designs. Investment of about £2 billion in sports facilities and coaching, for example, is a move in the right direction. It remains to be seen whether we shall achieve the 70 per cent. target, but we can make inroads into that if everybody starts to attend gyms such as that in the House of Commons.

Diane Abbott: Does my right hon. Friend accept that we cannot meet targets for sports and leisure training without swimming pools and leisure facilities? Three swimming pools in Hackney have closed recently, culminating in the closure, apparently indefinitely, of the Clissold Hall leisure centre. It was one of 12 millennium projects and it opened two years late and was four times over budget. Will my right hon. Friend see what hope he can offer my constituents, who instead of seeing more facilities are seeing fewer?

Richard Caborn: I cannot comment on the detail of my hon. Friend's question. I can say only that there are more swimming pools in this country than ever before. Although there are fewer pools in the public sector than there are in the private sector, there has been a massive increase in facilities in both sectors. If my hon. Friend wants to write to me giving the details of her points, I shall try to answer them. It is disappointing when facilities are closed, but if that was done as part of a modernisation programme, which many local authorities are going through, that must be weighed against what my hon. Friend has said.

Sydney Chapman: The Minister will know that back in 2001 his Department had a so-called public service agreement to increase the time that schoolchildren spend on sport or physical exercise. Will he confirm that his Department's annual report last year confirmed that the time spent on such activity had declined? Is it not a matter of urgency that the Government get a grip on this issue and come forward with a programme to ensure that our children spend more time on sport or physical exercise?

Richard Caborn: The hon. Gentleman is right in that the level of activity that we found in our schools when we came to power in 1997 was deplorably low. We have now committed ourselves to providing, in the period up to 2006, two hours a week of quality physical activity for every child aged five to 16. The investment programme for that is under way, and we will have 400 sports colleges and 3,000 school sports co-ordinators. At the moment, 225 of those sports colleges are up and running and some 1,300 co-ordinators are in place. Money is in the budget for that, and we are rolling out the programme according to plan.

Olympic Games

Eric Joyce: What assessment she has made of the impact on Scotland of a successful UK bid for the 2012 Olympic games.

Tessa Jowell: I am grateful for the support of the First Minister, Jack McConnell, for the London Olympic bid. He recognises the excitement and energy that the Olympics would bring to every part of the United Kingdom. In testing public opinion before the decision to bid, we found that the level of support for bidding was higher in Scotland than almost anywhere else in the UK. Scottish athletes will enjoy the great boost to sport that the Olympics will bring. Hampden will be used as one of the football venues, and training facilities will be needed for the many visiting athletes. Of course, the tourism profile of the whole UK will be higher, which can only be good for Scotland.

Eric Joyce: I thank my right hon. Friend for that answer. She will be aware that there are a number of super, high-level facilities in Scotland, such as the national swimming academy in Stirling, the judo centre of excellence in Edinburgh and the rowing centre of excellence at Strathclyde university. Does she agree that a successful Olympic bid, or even simply an Olympic bid, would enhance the possibility of the success of a Scottish bid for the 2014 Commonwealth games?

Tessa Jowell: I agree with my hon. Friend, who will know that the four home countries are working closely together through the sports cabinet to plan and support bids for major international events such as the Commonwealth games, when the time comes. I know that Scotland is interested in the Commonwealth games, and we welcome Scotland's support for bringing the Olympics to London.

Andrew Love: The best way to have an impact in Scotland is to give Scotland a voice. The Secretary of State is currently setting up a forum in London to give people in London a voice. Why not extend that to other parts of the country so that the whole country can have a say in the way in which the bid is put together? In that way, people can be reassured that their part of the country will be included.

Tessa Jowell: That is a very important point, and Barbara Cassani and other members of the bid team have been travelling all round the UK to have precisely those discussions. She had a good, constructive meeting with the First Minister in Scotland. The key to the success of our Olympic bid will be to achieve a high level of enthusiasm not just in London, but radiating right round the United Kingdom.

National Gallery

Tam Dalyell: When she last met the director of the National Gallery to discuss the work of the gallery.

Estelle Morris: My right hon. Friend the Secretary of State met the director of the National Gallery on 9 February 2004.

Tam Dalyell: Goodison recommended tax relief on lifetime donations of works of art to national museums. What is Government thinking on that recommendation?

Estelle Morris: My hon. Friend is absolutely right, and I pay tribute to Goodison and the Goodison committee for their work in the report that they have put before us. The current situation is that the committee's recommendations are being discussed and consulted on by the Treasury, the DCMS and other interested parties. I am afraid that we will have to wait for a future date to take a decision on that matter, possibly as part of the spending review. However, the report has certainly informed our thinking on that important issue.

Hugo Swire: I declare an interest as the person who founded the development office at the National Gallery. I am therefore fully cognisant of the reluctance among National Gallery staff and trustees to have deaccession rights. Has the Minister had discussions recently with the gallery's director—and with other museums—on the possibility of the trustees being invested with such powers? Although the director is aware of the demands of potential donors such as Sir Denis Mahon, with his Guercinos, he feels very strongly that they should not have those rights. That should be looked into. Has the Minister had those discussions?

Estelle Morris: No, I have not.

Chris Bryant: Further to the question asked by the Father of the House, may I press the Minister a bit more? When she last visited the National Gallery did she look at the little labels beside the paintings and notice that many of them are on private loan, which means that they could be put up for sale at any time and leave the country? If our national treasure is not to be raided, can she push the Treasury hard to extend tax concessions so that we can ensure that more of those paintings stay in the United Kingdom?

Estelle Morris: I take my hon. Friend's point, but there has already been substantial investment to make sure that we keep as many works of art as possible in this country. Many in the House will welcome the fact that "The Madonna of the Pinks" is still in the National Gallery, will shortly go on tour and has been saved for the nation. However, we will never reach a point where we can save every single work of art in this country that we would like to save—that is not the real world. At the start of his question, my hon. Friend was almost disparaging about the fact that works of art from private collections are on loan. I think that that is a good thing, but we will keep a wary eye open, make sure that we offer incentives and build on the progress that has been made.

Patrick Cormack: Does the Minister accept that if the National Gallery and other great museums and galleries were allowed to go down the road to deaccession that would deter many private lenders and donors? Does she also accept that there is unanimity among the directors about the wisdom of the report by Sir Nicholas Goodison?

Estelle Morris: On the latter point, the directors were represented on the committee and made a good contribution to it, so I accept the strength of their backing for the report. There have been two comments in Question Time about the tricky issue of deaccessioning. It is a live issue, and I have heard debates among museum directors in which both sides of the argument were expressed. The Government have not engaged with that debate, and have no plans to change the current regulations. On a personal level, however, if it is a live issue among museum directors, I am pleased that it has been brought into the open—it is a debate in which people interested in museums and galleries and others will want to take part. However, I want to make it clear that that debate was not initiated by the Government, and we have no plans to change the legislation in that respect.

Olympic Games

Elfyn Llwyd: What initiatives she is pursuing to inform other parts of the UK of the potential benefits of a successful London Olympic bid.

Tessa Jowell: The arguments that I set out for the benefits of the Olympics for Scotland are exactly the same as those for Wales. The millennium stadium will be an Olympic venue, and just as I am grateful for the Scottish First Minister's support, so I am grateful for the support of the Welsh First Minister.

Elfyn Llwyd: I support the London Olympic bid, but there is a certain amount of concern in Wales. The right hon. Lady will know that the Sports Council for Wales has already cut grant funding—only half to two thirds of projects currently receiving grant aid will receive the full amount that they have been promised—because of the introduction of the Olympic lottery game. Bearing in mind the fact that the millennium stadium will host just one football match, the right hon. Lady will understand that the people of Wales are underwhelmed by the prospective bid.

Tessa Jowell: Let me deal with the last point first. Yes, that is the case, but there will also be opportunities to establish training and preparation camps for visiting teams in Wales, which has to sell the case for locating camps there. As for the hon. Gentleman's point about the lottery, there is a misunderstanding among a number of home country sports councils. Very simply, the position is that £300 million of sport lottery money will be allocated to the Olympics, but the decisions about the way in which that money is spent will be taken collaboratively by the four home country sports councils to ensure that each is content with the nature of support for elite athletes that that lottery money will fund.

Clive Betts: I am sure that my right hon. Friend is aware that in Westminster Hall last week we had an excellent debate on the benefits of a successful London Olympic bid, but will she assure me that in the event of a successful bid, funds will not be diverted either from sports projects in the north and other parts of the United Kingdom or from grass-roots sport? The Olympic bid should be a success for the whole country, so will she do her best to press the Chancellor of the Exchequer to make sure that funding is available for facilities in the rest of the country, which should not be hurt by a successful Olympic bid?

Tessa Jowell: Yes, of course. I and my right hon. Friend the Minister for Sport argue, and will continue to argue, the case for sport. My hon. Friend is right—it would be wrong if a successful bid to host the games in London were to lead to a reduction in funding for community and school sports facilities in the rest of the country. Underlying the bid for the Olympics is the ambition to get more kids playing sport, competing and becoming champions.

ELECTORAL COMMISSION COMMITTEE

The hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission, was asked—

Local Government Boundary Review

Bill O'Brien: To ask the hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission, what proposals there are to allow further and wider community participation in the procedure for the review of local government ward boundaries; and if he will make a statement.

Peter Viggers: Later this year, the boundary committee for England will complete its programme of periodic electoral reviews. I understand that the Electoral Commission will then undertake a comprehensive appraisal of its review processes and policies, which will include consideration of community participation in the process.

Bill O'Brien: I advise the House that from my experience of schemes for changing the ward boundaries of local authorities, local individuals and groups may come up with perfectly good ideas, but because they do not have the ordnance survey, the electoral details or the projected housing for the next five years, and cannot supply that information to the boundary committee, their scheme is not considered. That is unfair and unreasonable to the people involved and changes will have to be made. When will the House have the opportunity to debate the recommendations of the boundary committee and the boundary commission?

Peter Viggers: The boundary committee asks local authorities being reviewed to make available locally all relevant electoral data so that any interested party should be able to access exactly the same detailed information on which to base their proposals as does the council. The committee also provides a wide range of information to interested parties about its electoral review work through the press, media, its website, council offices and local libraries. I am advised that the Electoral Commission and its boundary committee then give equal consideration to all submissions that are received, with the main consideration being the level of argumentation and advice that accompanies any submissions. Later today, the House will have an opportunity to consider some aspects relating to Electoral Commission work.

Anne McIntosh: I declare an interest, inasmuch as the Vale of York came into being in 1995 and is due to expire when the next boundary commission takes effect. Is it the case that in their representations on local government boundary changes, parish councils carry more weight than individuals? Is the Speaker's Committee mindful of that, and should not individuals be heard in the same way as parish councils and others?

Peter Viggers: The advice I have been given is that the Electoral Commission and the boundary committee review the level of argumentation and evidence that accompanies any submissions, and they seek to be scrupulously fair.

Harry Barnes: Might there not be more interest in the review of local government boundaries if there were more candidates coming forward in local government elections, especially in parish areas where there are often hosts of unopposed returns? Might there be added interest if there were a television campaign at about the time of the elections to encourage people to stand? There would then be greater interest in what was happening in the community, which might affect boundary reviews.

Peter Viggers: The Electoral Commission carries out a wide range of activity to encourage interest in the electoral process. I am sure that the hon. Gentleman's point will be noted.

All-postal Elections

Philip Hammond: To ask the hon. Member for Gosport, representing the Speaker's Committee on the Electoral Commission, what assessment the Electoral Commission has made of the potential risks of holding all-postal pilots in four regions in the June 2004 European and local government elections.

Peter Viggers: The Government directed the commission to make recommendations as to which regions were most suitable to undertake all-postal voting in the June 2004 European and local government elections. The commission's report published in December therefore examined a range of issues, including the potential risks in each potential pilot region. The commission concluded that two regions best met the criteria and were suitable for piloting all-postal voting. Its opinion on the Government's proposal for four regional pilots, as opposed to two, is set out in the letter of 4 March from its chairman to the Under-Secretary of State for Constitutional Affairs, the hon. Member for Shipley (Mr. Leslie), the text of which is available on the commission's website and a copy of which has been placed in the Library.

Philip Hammond: I am grateful to my hon. Friend for his reply. I have now seen the letter to which he referred, but it had not been published when I tabled my question. It is clear from the letter that the Government have attempted to lean on the Electoral Commission ahead of today's consideration of Lords amendments to the European Parliamentary and Local Elections (Pilots) Bill, which would have the effect of reverting to two pilots, as the Electoral Commission recommended. It is much to the commission's credit that it is unbowed in its objection to conducting more extensive all-postal voting before necessary legislative changes are made. The letter makes it clear that its expert opinion is being overridden by the Government.
	It is only by chance that that important letter came to my attention today, and I suspect that many other hon. Members will not be aware of its presence. Will my hon. Friend explore with the Electoral Commission whether it could routinely make available in the form of briefings to Members of Parliament matters of such importance, where issues touching on its work are to be debated in the House?

Peter Viggers: I think that the Electoral Commission has been assiduous in keeping hon. Members informed of developments in the field of electoral reform. The issue in question arose at very short notice, and the letter was placed on the commission's website and in the Library, so it was available to colleagues. The commission was concerned about the number of pilot regions. The letter states:
	"As I have mentioned, we expected the Government to nominate three regions and were surprised to learn that the Bill was to be amended to name four regions."
	It went on to say:
	"You are aware of our view that the rollout of all postal elections needs to be underpinned by a more robust statutory framework."
	There will be an opportunity for the matter to be discussed in the House later today.

Gwyneth Dunwoody: Is the hon. Gentleman aware that the Electoral Commission, which does a good job in protecting the interests of the electorate, is right to be concerned about the lack of proper supervision? If the Bill gets on to the statute book, will he do everything that he can to encourage it rapidly to put in place monitoring machinery that will ensure that there is no fraud or forgery, as that would be very damaging to the electoral process?

Peter Viggers: Indeed. The hon. Lady referred to her concerns, which are reflected in the chairman's letter, which states that all-postal elections need to be
	"underpinned by a more robust statutory framework."
	That is one of the risks that was identified in the Electoral Commission's report of December 2003, and one of the matters that has not perhaps been given the weight that the commission might have wanted it to be given in the Government's response.

David Heath: Is the hon. Gentleman concerned that the views of the Electoral Commission are being systematically misrepresented by Ministers in this House? For example, on Thursday 4 March the Leader of the House said of the Electoral Commission:
	"it has said that we should go ahead with two schemes and, if we judge that there are sufficient resources and so on to enable four pilots to be held, that we should go ahead and hold those as well. That is exactly what it said."—[Official Report, 4 March 2004; Vol. 418, c. 1066.]
	My understanding is that that is exactly what it did not say. I wonder what the hon. Gentleman would say about that observation.

Peter Viggers: I have seen a copy of the parliamentary report and it would not be appropriate for me to comment on it. What is more appropriate is for me to read out a section of the letter from the chairman of the Electoral Commission, dated 4 December:
	"There is also in our view increased risk, with combined elections and in some cases new boundaries, in running on such a large scale and we are not persuaded that the risk is outweighed by what we might learn from four regional pilots as opposed to two."

CHURCH COMMISSIONERS

The hon. Member for Middlesbrough was asked—

Westminster Abbey

Roger Gale: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, if he will make a statement on the timetable for removal of the temporary builders yard adjacent to Westminster abbey.

Stuart Bell: The dean and chapter are working closely with English Heritage and Westminster city council under guidance from the Westminster Abbey Fabric Commission to reduce the size and area of the masons yard, which is required for essential restoration work.

Roger Gale: As this House appears ready to permit Parliament square to be used as a junkyard for largely unattended protest placards, this question might appear a little churlish, but the last time I did a recce of this particular corner of Westminster abbey—arguably one of the most historic ecclesiastical buildings in the world—I discovered that the yard is no longer used by masons, whose trade is honourable and whose work is essential, but is being used as a storage yard for, as far as I can see, vehicles and other junk from Westminster city council. Will the hon. Gentleman please take that message back to the commissioners, with a view to having the area cleared in time for the tourist season, so that it can be used as a proper facility?

Stuart Bell: I shall certainly check out the use of that space. Ever since Henry III knocked down the Norman abbey and started again in the 13th century, we have appreciated the abbey's magnificence, its daily worship, its splendid architecture, its fine musical tradition and its significance for visitors—to which the hon. Gentleman referred. It brings us joy, but that has a price, and the price is the burden of maintenance. We shall certainly check out whether the city council or the abbey is responsible.

Church Land

Bob Russell: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what action parishioners can take to prevent Church land in their parish from being sold by the diocesan authority for development.

Stuart Bell: A diocesan board of finance is legally obliged to serve notice of the proposed sale of glebe land on the local incumbent or, in a vacancy of the benefice, on the priest in charge or churchwardens of the parish. They can make representations to the commissioners, who then decide the matter.

Bob Russell: Will the Church Commissioners have words with the Chelmsford diocese over the glebe field in the Mile End area of Colchester, where the diocese used the opportunity of the rector's departure to acquire part of the rectory grounds, add it to the glebe and put it on the market, against the wishes of local residents and the parish council? Does the hon. Gentleman agree that avarice shown by the Church is rather worse than avarice shown by property speculators?

Stuart Bell: I anticipated the hon. Gentleman's question about the glebe field on the edge of Colchester, and we have already taken up the matter with the diocese. The legal obligations of the diocesan board of finance fall under the Endowments and Glebe Measure 1976. On the question of avarice, the Church does the best it can and is not to be compared with property speculators or developers, but I will be glad to take up the matter on the hon. Gentleman's behalf.

Kevan Jones: May I raise the question of the development of land at Lingey house in Sacriston in my constituency by the Church Commissioners? What weight is given to local people's views? I ask that especially in light of the letter that I received from Vivien Brooks of the Church Commissioners, saying that she sees no reason for a meeting with local residents if it is for the purpose of discussing access and egress at the development site. I would expect such a hard-nosed approach from the most callous of property developers, but not from an organisation that is supposed to support the local community.

Stuart Bell: I am grateful to the hon. Gentleman for raising that constituency matter. He and I have been in communication on it, and it concerns access and egress, as he said. We have given him some letters, and I have said that, as a Church Commissioner, I will be happy to discuss directly with him his constituents' concerns, and I look forward to our having such a meeting shortly.

GM Crops

Simon Thomas: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what the policy of the commissioners is regarding (a) the cultivation and use of GM crops and (b) the keeping of animals on their land.

Stuart Bell: The Church Commissioners do not permit the growing of GM crops on their land. As to the keeping of livestock, the commissioners expect their tenants to observe the requirements of law and best practice.

Simon Thomas: I thank the hon. Gentleman for allowing me, as a member of a disestablished Church, to ask this question. I am delighted that the Church Commissioners have made this decision. In the light of a likely announcement by the Government tomorrow licensing the commercialisation of GM crops, I hope that the commissioners will maintain an interest in low-intensity and possibly even organic agriculture, and not in chemical-based agriculture.

Stuart Bell: I am always happy to welcome Plaid Cymru to questions, in the best traditions of our national Parliament, in which all right hon. and hon. Members can put questions to a Church Commissioner. The GM policy to which I referred reflects the advice of the Church's ethical investment advisory group in 2000, as endorsed by the commissioners. I have no reason to believe that that advice will change in the none too distant future.

Mission Activities

Michael Fabricant: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what the current plans are for the funding of mission activities and for the future of the section 23 grant for cathedrals with respect to the recent decision made by Synod; and if he will make a statement.

Stuart Bell: The Church Commissioners' spending plans for 2005–07 will be developed over the coming months in the light of the actuarial evaluation of the commissioners' fund, and they will take on board views expressed by Synod and others in the Church.

Michael Fabricant: I thank the hon. Gentleman for that answer, but does he not realise that many cathedrals and diocese are concerned that money might be diverted from mission duties and the funds available to cathedrals for restoration, and instead given to other worthwhile causes such as the maintenance of parish churches? What can he do to assure them—including, of course, Lichfield cathedral—that that will not happen?

Stuart Bell: I am grateful to the hon. Gentleman for that question and I welcome him back to our Question Time; I thought that he had deserted us for a while. Having visited Lichfield cathedral, I can well understand his concern about this matter. He is certainly right in that during the early 1990s the decision was taken heavily to cut parish ministry support, which then stood at some £60 million. However, he should know that in 2003 the commissioners provided £2.5 million in grants to cathedrals under section 23 of the Cathedrals Measure 1999; in addition, they spent £3.8 million on cathedral clergy stipends. Having visited Lichfield cathedral last summer, I am looking forward to visiting it—and, of course, other cathedrals—this summer.

European Communities Association Agreement

David Davis: (urgent question): Will the Secretary of State make a statement on the immigration service's operation of the European Communities association agreement?

Beverley Hughes: Under the European Communities association agreement—which was signed in 1994, 1995 and 1999—citizens of countries seeking to accede to the European Union must be treated on a par with European economic area nationals for the purpose of establishing themselves in business in any member state. This means that nationals of a number of central and eastern European countries can set themselves up in a company, as sole traders or in a partnership, in any of the existing member states. In the United Kingdom, the EC association agreements are incorporated into the immigration rules. To enter under this category, an applicant has to provide evidence that the proposed business will generate enough income to maintain him or her and any dependants.
	Towards the end of last year, a backlog of such cases accumulated in our Sheffield office, following the introduction of charging and a seasonal increase in other applications during the autumn. Without any authorisation from any Minister, or from senior managers or the director general, guidance was issued locally to staff, to the effect that in straightforward cases—mostly those involving people who already had leave to remain—the application should be granted without further inquiries being made, provided that a business plan had been submitted.
	There was no question of staff being instructed to grant such leave to those whom they believed to be fraudulent. Furthermore, the guidance made it explicit that applications from those here illegally were to be refused in the normal way. However, the guidance did enable workers to approve applications without further checks in cases involving those who were already here legally—they are the majority—or those who were otherwise judged to be low risk. Ministers were not consulted and I have ordered a full investigation into how this came about. The investigation will be conducted by a senior immigration and nationality directorate official, from outside the managed migration directorate. I have also issued instructions that the local guidance be rescinded forthwith, and that all such cases receive the same level of scrutiny as before.
	I refute categorically, however, the suggestion that this was a deliberate policy to reduce the impact of accession on 1 May. The essential point is that, as I have said, no change in practice was authorised by Ministers or senior managers. It is worth remembering that, principally, the people affected were already lawfully in this country.

David Davis: The Minister has announced an investigation, the first stage of which will presumably be to establish the facts about the procedures and the behaviour of the Home Office immigration service. Will she publish those facts within one month, so that the House of Commons can know what is happening before European Union accession on 1 May? Will she assure the House that any civil servant who tells the truth about this issue will not be disciplined or punished for doing so?
	On Sunday, a Home Office spokesman said:
	"There have been no changes in procedures or dip in the level of the scrutiny applied by caseworkers."
	I take it that the Minister no longer stands by that statement. She claims that she was unaware of the behaviour described by Mr. Moxon. However, the Home Office has had three days since it was challenged by The Sunday Times over the issue on Friday, and two months since Mr. Moxon e-mailed her. At the very least, she should be able to confirm or deny the existence of the documents described in the newspapers.
	As the Minister has asked us to believe that neither she nor the Home Secretary was aware of the decision, will she tell us who authorised it? In particular, will she confirm the existence of the document entitled "Flexibility guidance: ECAA guidance for Entry Clearance cases post August 1st", which stated:
	"As this is NOT a published policy, however, no reference should be made to this, either to the applicants/representatives, or on the immigration service computer system"?
	Will the right hon. Lady explain that doctrine of unpublished policy? Is this a policy whose existence is withheld from Ministers, or is it just Parliament and the public who are meant to know nothing of it? Are there other secret immigration policies of which the House has not been notified?
	Is it true that the document says that
	"previous failed asylum seekers or illegal entrants can still benefit under Entry Clearance Rules"?
	Is that official policy, or is it another secret guideline unknown to Ministers? Is it true that the document states that guidelines were relaxed so that even if there were no proof of financial status whatever, the policy would still be to grant one year's leave to remain in the country? How many people have been allowed in under the new rules? Will the Home Office review the decisions taken in the last six months, and could decisions be overturned?
	Does the Minister realise that this is not the first time stories have emanated from the immigration service about fiddling the figures? There have been at least three, if we include those about soft-pedalling on illegal immigration and asylum. Does she not remember that I raised this question with her at the most recent Home Office questions, and she dismissed it? Will she explain why she did not act on the e-mails sent to her about the problem? Mr. Moxon's supervisor confirms that those were sent to her on 12 January.
	Does the Minister recognise that whether there has been collusion, cover-up or simple incompetence, the responsibility for this disgrace rests firmly with her and with the Home Secretary?

Beverley Hughes: I set up the investigation for the exact purpose of establishing the facts, and I will certainly find out how we can make those facts known to Members of the House in the most appropriate way. If it is any comfort to the right hon. Gentleman, I can tell him that I do not relish being in this position; it is not a position that I would want to be in. The situation that has been revealed as pertaining at a junior level in Sheffield is quite unacceptable; I make no bones about that.
	The right hon. Gentleman has asked me several questions, and I shall deal with them in so far as I have the answers today. The response from the Home Office to the press reports on Friday—that there had been no dip in scrutiny—was wrong. That advice was given to the press office by a senior manager, who was one of the people who did not know at that time that the local guidance had been given and was operating. Arguably, she should have known, but she did not, and she gave the best advice that she had on Friday. Since then, as a result of The Sunday Times story, senior officials and I worked all through yesterday to get the information, as far as we could.
	The right hon. Gentleman mentioned the e-mail sent to me, and I am grateful for an opportunity to clear up that matter. I visited the office concerned on 4 December and, as I always do, I had a question-and-answer session with staff. I understand that Mr. Moxon wrote three questions that he wanted to put to me. He was not in the meeting, and I did not get to see him, or those—[Hon. Members: "Why not?"] I have no idea why he was not there.
	Mr. Moxon's questions then went round a number of managers and eventually came to my private office on 12 January. I did not know that until yesterday—[Hon. Members: "What?"] I know that Members will suspect another conspiracy, but the fact is that I had a new member of staff starting work on 12 January, and in the week from 12 to 16 January she was shadowing the person who was leaving. I am afraid that I was not informed until yesterday about that e-mail, which was not sent on for senior managers to construct a reply for me. The situation is not acceptable, but that particular issue was the result of a human error on the part of an assistant private secretary in my office. As the right hon. Gentleman has been in this position himself, I hope that he accepts that Ministers do not manage civil servants; we depend on senior officials to give us the right information so that we can correct points that need to be corrected.
	The right hon. Gentleman asked who authorised the local guidance, and that is the point of the investigation.

Roger Gale: On a point of order, Mr. Speaker.

Mr. Speaker: Order. There are no points of order during a statement. I should have thought that a member of the Chairmen's Panel would know that. I also expect a member of the Chairmen's Panel not to shout while the Minister is speaking.

Beverley Hughes: Thank you, Mr. Speaker.
	I have not yet established who authorised the publication and distribution of the guidance, and that is the point of the investigation. I saw the flexibility guidance to which the right hon. Gentleman refers for the first time this morning—it was issued in September 2003 and contains the quotations that he read from it.
	This is the system for ECAA applications: if a person is in the country, they can initially apply for one year's leave to remain. The terms of the accession treaties require such people to be treated in exactly the same way as other member states' nationals, so it is meant to be a light-touch assessment. If such people are still here after a year and their business is sustaining itself, they must apply again, and bank statements and records of national insurance contributions are required at that point. The situation is the same in every EU country, and there is nothing different about it here.
	The right hon. Gentleman asked about numbers. People given leave to remain for that purpose are included in migration statistics, but they are not identified as having come through that route—they are included in the leave to remain figures and the further leave to remain figures. That is not acceptable, and we must see whether we can extract those figures so that they are discernable.
	I think that I heard someone call out that 11,000 applications were processed in one week, and that figure has featured in some press reports. I can make no sense of it, and the investigation will explore that point. I am pretty sure that it is not possible that 11,000 applications were processed through the ECAA route in one week, because the backlog that staff were trying to reduce was 7,000 cases. However, the confusion over the 11,000 figure may have arisen because 500,000 cases come through the general group every year—those cases cover leave to remain and do not include asylum, nationality or work permits. That figure covers all the cases processed in Sheffield, Croydon and Liverpool for any purpose—marriage, students or whatever—and it equates to about 11,000 cases a week. I wonder whether it has been promoted as relating to the ECAA applications through confusion or a more malicious purpose, but I am fairly clear that it does not.

Keith Vaz: May I welcome the statement by my right hon. Friend, who is right to initiate an inquiry? This may be the first time in history that Home Office officials have been criticised for removing a backlog rather than creating one. She will know that in 52 days' time such applicants will be full EU citizens with the right to work here subject to registration. Will she give an undertaking that the status granted by the Home Office in Sheffield will not be affected by Conservative Members' comments?

Beverley Hughes: I am grateful for my hon. Friend's question. It is not feasible to reconsider applications that have already been granted—among other things, there would be many legal impediments—but I shall ask my officials to consider the matter. My hon. Friend will know that, as far as self-employed people are concerned, no member state can derogate from the terms of the treaty.
	I might point out that the terms of the treaty were agreed in 1994, when the Conservative Government were in control. The treaty allows nationals of acceding countries to come into this country under these special arrangements before 1 May 2004, in anticipation of the rights that they will have after that date. At that point, those nationals will be able to enter any EU country and establish a business without any requirement to publish a business plan or anything else. They are to be treated exactly the same as EU nationals. As my hon. Friend says, that will be the case in a few weeks' time.

David Heath: I have listened with great care to what the Minister has said this afternoon, but the only bit that I feel able to welcome is the fact that an inquiry has been established. Even on that, I believe that it should be independent of the Department, which is clearly at fault. This is no longer about immigration policy: it is a question of the competence and organisation of the Department, right up to Ministers themselves. Is it not unsustainable for an undisclosed policy to run in parallel with the policy disclosed to the House? That is especially the case when it would appear that people are being admitted on little more than a bus ticket, while others in similar circumstances are deported. That is not sustainable.
	Was Mr. Moxon required to operate the policy in the Department's Sheffield office at the time when my hon. Friend the Member for Southwark, North and Bermondsey (Simon Hughes) asked questions specifically about the operation of the office on 2 July 2003, at column 324W? Specific requests were made of the Minister to provide information on the operation of the directorate in Sheffield. Were no inquiries made at that time? Was there dissimulation on the part of those working in that office? Was it simply the case that the advice to civil servants that they were not even to refer to the policy guidance on their computers extended to not referring to it in response to parliamentary questions?
	If, as the Minister has said this afternoon, the basic principles of what Mr. Moxon has described—for whatever motives—in the newspapers are true, and the documents on which he based his evidence were genuine, is not it extraordinary that it is Mr. Moxon who is suspended and will presumably be subject to further disciplinary action, rather than those who ordered this extraordinary state of affairs?

Beverley Hughes: I agree with the hon. Gentleman's basic premise that questions clearly arise about competence, unacceptable behaviour and management. The investigation will seek to provide the answers to those questions. However, my biggest regret is that incidents such as this, however rare and untypical they may be, create a general impression about the vast majority of very good staff in the immigration and nationality directorate, who have worked hard in the past 18 months to build up an organisation that the Conservatives left in a parlous state in 1997. It grieves me that the efforts that the staff have put in and what they have achieved—in getting to grips with asylum applications and correspondence, and introducing proper practices to the organisation—are diminished and clouded by the actions of some people. However well intentioned those actions may have been, they were wrong and cannot be justified. I am taking action to ensure that we get the full answers as to how and why the problem arose, why senior managers did not know and how people can feel that they can behave in that way without permission.
	As to Mr. Moxon, I hope that the hon. Gentleman understands—and agrees—that it is not the job of Ministers to manage personnel. I am sure that in other parallel circumstances, all Opposition parties would acknowledge that. I have to leave decisions about personnel to senior managers, who decide what, if anything, needs to be done.

Teddy Taylor: As the Minister said, the flexibility policy was not approved by Ministers in any way whatever and is now to be cancelled. Given that Mr. Moxon endeavoured to advise the Minister, by writing letters to her, is it not wrong in principle to suspend him? In my view, he has done nothing wrong, and has only drawn the Government's attention to a muddle. Will the Minister try to solve the problem by ensuring that in every month until May, she publishes the number of people who have been permitted to come here from the eastern European countries that are being admitted to the EU?

Beverley Hughes: On the hon. Gentleman's last point, I would like to clarify an important aspect of applications through the ECAA route, where people apply to set up businesses here. The vast majority of people given permission to settle through that route are already—and legally—here. We are not talking about a whole additional group of people coming in: there are some, but the majority are here in one capacity or another, have been admitted regularly and are here legally. Some people are applying to switch into the business route. It is important that Members understand that and avoid claiming that somehow large numbers of additional people are coming into the country through that route. As I said, most are already legally here.
	I understand the hon. Gentleman's point about Mr. Moxon, but an investigation is taking place and managers have taken the view that it is right and appropriate for him to be suspended at this time. He will be interviewed and no doubt managers will reach their own conclusions about what, if anything, needs to be done.

James Clappison: In the light of the very unsatisfactory circumstances relating to the Minister's office, which must be her personal responsibility, will she now say exactly when she discovered the state of affairs that she has described today?

Beverley Hughes: Yesterday.

David Heathcoat-Amory: When the House debated and passed the EU enlargement treaty last year, many hon. Members asked the Minister about the immigration figures. We accepted her assurances then on the assumption that she was in control of her Department. It now seems that her Department ran a parallel covert immigration policy, so was not the House misled in that respect when the treaty legislation was passed?
	Will the Minister comment on a further specific matter? She alluded at that time to a Home Office study that established that the maximum immigration from the country concerned would be between 5,000 and 13,000 a year. Will she confirm that she still holds and stands by those figures? Ministers have been asked about that repeatedly in recent weeks, but have provided evasive answers.

Beverley Hughes: We have not given any evasive answers. I certainly accept that we should be as well informed and transparent about these issues as possible, but I would also say, with respect, that the right hon. Gentleman needs to be better informed. The questions that he has just asked reveal considerable muddle about the issues. There are two main issues. One is the ability of people to enter the country and seek work—in other words, to be given free movement as workers. In respect of an estimate of those numbers, the Home Office commissioned independent research by University college London, which produced best estimate or best advice figures.
	What we are now discussing is a wholly separate issue: under the terms of the EU treaty, every member state signing up to it—I have already said that when it was signed in 1994, the UK was Conservative controlled—agreed to allow a number of people to enter the country not to work, but to set up in business. That applied to all member states under the terms of that agreement up to 1 May this year, after which there will be no further requirements under free movement provisions to allow people to go through some form of process if they are to set up a business. They will be treated like any UK citizen, and the same terms apply in Germany, France, Italy—[Interruption.] I am surprised that the shadow Secretary of State does not seem to understand the rules. People from any member state—both now under the terms of the EC association agreements and in May under the terms of the treaty—will be able to come into the country, be treated like any UK citizen and set up a business.

Michael Jabez Foster: Bearing in mind that Her Majesty's Opposition and all the other parties voted for the accession treaty, will a single additional person from the accession countries, who would not have had the right to be here, be in this country on 1 May as a result of this hiccup?

Beverley Hughes: The answer to that question is no; there will not be.

John Redwood: Will the Minister take this opportunity to congratulate Mr. Moxon on trying to alert her through the proper channels in December and January? Will she assure the House that disciplinary action will not be taken against him, and will she promise us that disciplinary action will be taken against all those who put through this unauthorised policy and, as she tells us, kept her in the dark?

Beverley Hughes: I have already said that an investigation is under way. I remind the right hon. Gentleman that it was this Government who introduced legislation to protect so-called whistleblowers. I wonder what his view of that was at the time. The bottom line is that I am glad that I now know what has been going on; I am glad that somebody has told me—and so are the senior managers. I repeat, though, that I regret the method that Mr. Moxon has used, not because of me—[Interruption.] I say that because it has cast a shadow—[Interruption.]

Mr. Speaker: Order. Hon. Members must allow the Minister to answer.

Beverley Hughes: It has cast a shadow over the excellent work of the vast majority of those in the IND, and has created a general impression, which is not typical, of such work.

John Wilkinson: I am almost sorry for the Minister, but I am a great deal more sorry for my constituents and the many other electors who have been kept in the dark—[Interruption.]

Mr. Speaker: Order. Let the hon. Gentleman put his question.

John Wilkinson: They have been kept in the dark by the Home Office and Her Majesty's Government over the extent of immigration into this country. Will not boroughs such as Hillingdon, which are in the front line due to the presence of Heathrow—the premier port of entry in the UK for immigration—be deeply preoccupied by the fact that the Government and the Minister's Department have been allowing a flexibility clause whereby those who came in, perhaps legally, have no work, are not in partnership and are not in paid self-employment? That has put a further burden on the health and social services in my borough, which are already over-stretched by asylum seekers and others.

Beverley Hughes: The hon. Gentleman's question illustrates the dividing line between his party and mine on the subject of immigration. Unlike him and his party, we welcome immigration where our economy needs it and do not automatically reject migrants. Provided that people come in legally and do not try to misuse the asylum system, we want people to contribute to our economy. I remind the hon. Gentleman that people coming in through such a route—I am not condoning for a moment the dip in scrutiny that has taken place—are supporting themselves. They do not have access to public funds. They are not able to take paid employment when they enter the country through this route, but they are supporting themselves and their families. Many are providing much-needed services, particularly in London and the south-east, as plumbers, cleaners and builders—services that many people in this country are not willing to provide. Such immigrants play an important part in that sector of our economy.

Equitable Life Inquiry

Ruth Kelly: With permission, Mr. Speaker, I would like to make a statement about Lord Penrose's report into the events at Equitable Life, which I can confirm is being published in full today. Copies are available in the Vote Office.
	As the House will remember, following the closure of Equitable Life to new business and the cuts in policy values in July 2001, the Government established an independent inquiry under Lord Penrose on 31 August 2001. The terms of reference were:
	"To enquire into the circumstances leading to the current situation of the Equitable Life Assurance Society, taking account of relevant life market background; to identify any lessons to be learnt for the conduct, administration and regulation of life assurance business; and to give a report thereon to Treasury ministers."
	I would personally like to thank Lord Penrose and his team for their hard work and dedication. The report presents a full and forensic account of events, covering some very complex issues and spanning a period of more than 30 years. The Government sympathise with the plight of policyholders who have suffered much worry and distress over the past four years and who have seen significant reductions in their expected income in retirement.
	Lord Penrose says:
	"I have interpreted the remit"—
	of the inquiry—
	"as requiring me to focus on the events that explain the Society's fate."
	He also makes it clear that
	"it was inevitable that hindsight would instruct much of the inquiry's work and many of its findings".
	Lord Penrose does not attempt to judge any person's actions. He says:
	"It was not for me to measure any person's actions against accepted standards of conduct defining the legal duties of other people performing comparable duties in other organisations and other similar circumstances."
	He observes:
	"Breach of duty, and the financial consequences of breach, are properly matters for the established courts of justice and for other appropriate tribunals in the financial sector."
	He adds:
	"An open adversarial process such as would have been necessary to replicate the litigation process over the longer period and the wider range of issues would have been beyond contemplation . . . It would be unthinkable for an inquiry such as this"—
	non-statutory and non-adversarial—
	"to have embarked on such a process."
	Moreover, he says:
	"There was no mechanism that could have been devised and put into effect within a time scale that would have had regard to the wider public interest in obtaining the account of the developments of the Society's position."
	Lord Penrose argues that the judgment of the House of Lords in the Hyman case in 2000, which disallowed the society's practice of reducing terminal bonus to meet guaranteed annuity claims, precipitated a crisis, but was not—as some have claimed—solely responsible for it. He notes:
	"Superficially claims of £1.5 billion should not have brought down a Society with funds of £32 billion."
	In Lord Penrose's own words,
	"The Society's uniqueness lay in the approach adopted by its management, not in the essential characteristics of its business."
	Lord Penrose describes how a culture of what at various times he calls "manipulation" and "concealment" on the part of some of the company's previous senior management allowed a bonus policy to develop that led to the society's financial weakening—a policy left unchecked by its own board. It was the society's own actions that ultimately precipitated its financial crisis in the summer of 2000.
	First, the report details how executive management failed to keep the board fully informed about the true state of the company's financial position, despite the clear responsibility placed on the appointed actuary to inform the board in that regard. Lord Penrose outlines how Mr. Roy Ranson, appointed actuary from 1982, and both chief executive and appointed actuary of the company between 1991 and 1997, did not inform the board
	"of management decisions in the period 1983–93 related to the recovery of the cost of annuity guarantees from terminal bonus".
	He did not inform the board
	"of the risks to which policyholders not entitled to annuity guarantees were exposed by the policies and practices adopted",
	and did not inform the board
	"about the business risks inherent in the general actuarial management of the Society".
	That meant, Lord Penrose says, that
	"the Board's understanding of the annuity guarantee issue was at best limited until the autumn of 1997, and some directors may not have had any understanding of the position".
	As a result, he says that the decisions of the board
	"brought the Society to the position of weakness in which it found itself in 2000 and 2001 without full knowledge and understanding of the developing position."
	He does not offer judgment on Mr. Ranson's failure to keep the board adequately informed. In line with his interpretation of his remit, he says:
	"I have not sought to form or express a view whether Ranson was in breach of duty . . . that is a matter for the courts and for his professional institute."
	But, in Lord Penrose's own words:
	"The Board at no stage got fully to grips with the financial situation faced by the Society: information was too fragmented, their collective skills were inadequate for the task, and there were no effective arrangements for ensuring that there was detailed examination of, and onward reporting to the Board, on actuarial reports."
	He adds that the
	"non-executive directors were so wholly dependent on actuarial input from the . . . chief executive/actuary that they were largely incapable of exercising any influence on the actuarial management of the Society."
	Lord Penrose also finds that there was
	"Serious omission in communication to policyholders of relevant information about their prospective interests."
	He reveals how the differential terminal bonus policy
	"was not disclosed to policyholders . . . in any way until 1996."
	Even when the company decided to inform policyholders about the terminal bonus policy in 1996, Lord Penrose argues that it was done badly—in his own words:
	"Attempts were made to change expectations in 1996 and later years. These were ill-conceived, poorly expressed and confusing. The intimations to policyholders were generally uncommunicative."
	Lastly, Lord Penrose finds that the society concealed information from the regulators. Mr. Ranson was, in Lord Penrose's own words, "obstructive" of scrutiny and "dismissive" of regulators' concerns. The regulatory returns were, he says, "opaque and uncommunicative". The Society did not inform regulators properly about
	"a series of particular valuation practices of dubious actuarial merit"
	that were being used by management to sustain the society's capital position and prop up its solvency.
	Lord Penrose reveals how, from 1992 to 2000,
	"the Society never clearly communicated the nature of its quasi-zillmer adjustment to"
	the Government Acturary's Department—an adjustment that, he says,
	"was not a legitimate device . . . on the terms of the regulations."
	In relation to guarantees, Lord Penrose finds that
	"Such references as were made . . . failed properly to disclose their nature and extent to the regulators."
	More recently, Lord Penrose observes the then appointed actuary, Mr. Christopher Headdon, wrote a crucial side letter relating to a reinsurance contract, which recorded that it would be cancelled, rather than renegotiated, in the event that more than £100 million was claimed. Lord Penrose notes that, if the Financial Services Authority had been made aware of that side letter,
	"they 'would not have been prepared to accept the reinsurance arrangements as providing as much security for reserving purposes as was in fact taken.'"
	Lord Penrose writes:
	"Those involved at the Society were not in any doubt that a right for the reinsurer to cancel in these circumstances would undermine the regulatory value of the agreement."
	Lord Penrose says:
	"These matters are potentially the subject of other proceedings, so I do not propose to comment on what may or may not have been the intention in writing the side letter or its legal effect."
	In short, Lord Penrose makes it clear that the society's former management adopted a series of "dubious" practices, many of which it concealed from its own board, its policyholders and the regulators. He argues that that led to the situation in which the society found itself in July 2001. Thus, as Lord Penrose says,
	"the Society was able to over-allocate bonus beyond available assets at market value, and in particular to make payments on claims that exceeded the relative available assets at the time."
	That weakened the society so greatly that it was unable to withstand the claims on guaranteed annuities.
	Lord Penrose's central finding is that
	"principally, the Society was the author of its own misfortunes."
	The House will be aware that Lord Penrose sent his report to the Serious Fraud Office. The Treasury followed up by passing the report to the enforcement arms of the FSA and the Department of Trade and Industry—all three are currently considering the evidence of the report.
	As I have described, Lord Penrose lays the blame for events at Equitable Life at the heart of the society. He calculates that, by the end of 2000, as a result of the excess bonus declarations, the society's liabilities exceeded its assets and £1.8 billion had been lost to the fund as policies matured taking more than their fair share of assets. That past over-bonusing was a driving factor, he says, behind the need to cut policy values in July 2001.
	The current management argue strongly that the cuts in policy values in 2001 reflected different factors. The House will appreciate that this is a complex legal, actuarial and accounting issue, which could ultimately be determined only by the courts. Lord Penrose himself makes it clear that he could not
	"adjudicate on the policyholders' complaints and claims: that again is a matter for other proceedings".
	It was, however, important that the Government acted with due diligence to check with the FSA the potential impact of these complex issues on the society's current policyholders and on wider financial stability. That is why we have been unable to publish the report earlier.
	The current board of Equitable Life will, together with the FSA, assess the impact on the society's liabilities and any risks to policyholders posed by Lord Penrose's findings. Those who have already seen limited extracts of the report on behalf of Equitable's board have concluded that it is in the best interests of policyholders to continue in business as before.
	To conclude on over-bonusing, Lord Penrose himself makes it clear on claims that
	"that again is a matter for other proceedings."
	The FSA will continue to monitor the society closely and take whatever action is needed to protect policyholders.
	Lord Penrose raises a number of important issues about the deregulatory, light touch, reactive system in the decades before the creation of the FSA. It was a system, however, that in that period clearly reflected the will of Parliament. He finds that the
	"lack of co-ordination of prudential and conduct of business regulation . . . was unacceptable"
	and that
	"the accounts did not reflect the realistic"
	financial
	"position of the office".
	In 1997, as soon as this Government came to power, they took action to put an effective regulatory system in place, setting up a single integrated regulator combining prudential and conduct of business regulation. A key part of the new regulatory regime was the creation of a comprehensive financial services compensation scheme and a single financial ombudsman service.
	Since then, the FSA has proceeded to introduce risk-based insurance regulation and individual capital standards. It is also in the process of introducing realistic accounting by life offices, including a requirement to reserve for terminal bonus. In addition, the use of future profits implicit items is being phased out. The FSA is also removing responsibility for making key decisions on asset allocation and distribution in with-profits funds from the appointed actuary and transferring it to company boards, and it has brought forward proposals on better treatment of customers by firms and fuller transparency of with-profit funds.
	Lord Penrose fully endorses the Government's actions since coming to power, saying that the FSA's reforms reflect
	"a major, comprehensive reassessment of the requirements of an efficient regulatory system for the insurance sector".
	In particular, he welcomes the FSA's detailed proposals for realistic accounting, which, he says,
	"are clear recognition of the importance of looking beyond a narrow concept of solvency".
	In summary, he argues that the FSA's work since 1997
	"has sought to anticipate many of the lessons that might be drawn by this inquiry and it should come as no surprise that it has largely succeeded."
	However, Lord Penrose's report deals with a time when a different regulatory system was in place, and a regulatory culture that was light touch, reactive and placed the responsibility for monitoring policyholders' reasonable expectations firmly on the appointed actuary of companies—a regulatory system that was argued for by Ministers and reflected the will of Parliament.
	Lord Penrose notes that in 1973, during the passage of the Insurance Companies Act 1974, DTI Ministers resolved
	"that action on the basis of policyholders' reasonable expectations would be reactive to what was found in the"
	annual regulatory
	"returns so as to restrict the workload that a less restrained approach would involve."
	Lord Penrose argues that the system was not updated to take account of developments in the industry, particularly the trend toward terminal bonuses. He notes that aspects of the regime were reviewed, but that no proposals for change were pursued by Ministers. He writes:
	"Virtually no primary legislation in the regulatory area for which DTI was responsible was taken forward by Ministers . . . there were specific proposals for change that Ministers did not pursue."
	In particular, a proposal was made in 1988 to update life insurance regulation, but in Lord Penrose's own words,
	"the Minister"—
	the right hon. Member for Bromley and Chislehurst (Mr. Forth)—
	"did not regard the subject as a high priority for legislation."
	Lord Penrose notes that senior regulatory officers argued to him that
	"the Government required a 'light touch' approach to regulation, and allocated resources accordingly."
	He says:
	"I was urged to take into account the political climate that prevailed for most of the 1990s when the Government's objective was to deregulate, to reduce regulatory burdens on business, to avoid interference in private companies, and to let market forces prevail."
	Lord Penrose goes further. He says that Ministers argued against reform in the early 1990s—a critical time of development in the industry—when the third life directive was being negotiated in Brussels, maintaining that the reactive approach to monitoring policyholders' reasonable expectations based on regulatory solvency was sufficient. According to Lord Penrose, the DTI believed that forcing insurance companies to reserve for terminal bonus would have been "over cautious". And Lord Penrose adds that the UK delegation "led the resistance" to measures requiring more cautious valuation techniques.
	Lord Penrose says:
	"As for the regulatory system, I do believe it has failed policyholders in this case."
	However, he emphasises:
	"Regulatory system failures were secondary factors",
	and argues that
	"it was the system that failed to provide the regulation that changing circumstances in the industry required, not that there was failure to implement what was fundamentally a satisfactory system."
	That system was one that Ministers and Parliament intended.
	Lord Penrose makes no recommendation for the payment of compensation. His central finding is:
	"Principally, the Society was the author of its own misfortunes."
	And when he itemises specific findings about the regulator, he is clear that these are matters that are not for him, but for the courts. Nor does he conclude that economic loss was caused to policyholders by the regulatory system. However, as Lord Penrose says in his own words:
	"The deficiencies are not so obvious as some are inclined (or wish) to believe. And . . . it is not enough in this case, to infer from the coincidence of systems deficiencies and loss that one caused or contributed to the other."
	He stresses that he examined the regulators with the benefit of hindsight and that they were operating under a system different in its approach, resources and values from that applying today. The misfortunes of the society were caused primarily, he finds, by deep-seated management problems that began as early as the 1980s.
	Lord Penrose makes no allegation of maladministration or of negligence against the regulator. He clearly establishes, with the benefit of hindsight, that the "light-touch" approach to regulation was inappropriate. It was not updated to meet the requirements of the industry, but it clearly reflected the will of Ministers and Parliament. He says:
	"Ministers resolved . . . that scrutiny would continue to be based on the examination of the regulatory returns, and that action on the basis of policyholders' reasonable expectations would be reactive to what was found in the returns".
	So, it is a question of the laws that Parliament enacted and the context in which Ministers resolved how those laws should be implemented that Lord Penrose criticises rather than the discrete actions of the regulators themselves. Indeed, Lord Penrose accepts that it cannot be the role of the regulator to prevent all failures. The costs of regulation are paid ultimately by the consumer rather than by the institutions themselves.
	Lord Penrose also accepts that even had a different, proactive regime been in place earlier, no regulator can guarantee to protect consumers against what he at various times calls concealment and manipulation. Indeed, the losses suffered by policyholders are attributed by Lord Penrose to decisions that were made by the management of the society from the early 1980s onwards. He observes:
	"by appearing to insulate consumers entirely from the risk inherent in the selection of an investment product such an approach could give rise to perverse economic incentives for both consumers and providers."
	That position is, I know, shared widely across the House. In July 1995, the then Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke), said:
	"I should like to remind the House of an important point. No regulatory system can provide a 100 per cent. guarantee against . . . failure, especially where there is a deliberate intention on the part of individual traders to conceal or deceive, combined with inadequate management controls. In cases such as this, it is important that lessons are learned quickly and promulgated widely, so that all parties, including the management of other financial institutions, can learn from the unfortunate example".—[Official Report, 18 July 1995; Vol. 263, c. 1457.]
	The Government sympathise with all policyholders who were deceived by a company that Lord Penrose says manipulated and concealed information from them. Although we will do all in our power to stand behind policyholders in difficult times, we cannot, in a financial services industry, like any other industry, underwrite each and every company whose managements and boards make fundamental mistakes and questionable decisions. In dealing with the issues, we have a responsibility, too, to the needs of taxpayers now and in the future.
	Many people have drawn parallels between Equitable and Barlow Clowes. It has been put to us that as the then Government provided redress in the Barlow Clowes case, we should do so with respect to Equitable, but there are major differences between the two cases. Barlow Clowes had ceased trading; Equitable is still trading. In the case of Barlow Clowes, there was a finding of maladministration; for Equitable, there has been no such finding. At the time of Barlow Clowes, there was no compensation scheme; now there is the financial services compensation scheme. Those who continue to argue that what happened for Barlow Clowes should also happen in the case of Equitable Life have got to take into account both the existence of a compensation scheme and no finding of maladministration.
	In the event that Equitable were to be subject to insolvency proceedings, there is now a statutory safety net, which was recognised as not being available at the time of Barlow Clowes, to protect investors, provided by the financial services compensation scheme, which would pay out 90 per cent. of guaranteed policy values. Further, the Government have also provided for a single financial services ombudsman to consider individual complaints. I understand that he is currently considering the cases of a number of different categories of former policyholder who have made claims for redress, for which the society has already made provisions. I want to make it clear to the House that we stand ready, if requested, to assist the financial ombudsman in expediting the resolution of those complaints. As I have made clear, Equitable's current board stresses that the company is solvent and policyholders' interests are best served by it remaining in business.
	In his report, Lord Penrose raises a number of issues concerning the unlimited liability status of Equitable Life. I can announce that the Government intend, at the earliest opportunity, to publish and consult on draft legislation to protect policyholders in the event that that were ever to become material.
	In line with his interpretation of his remit, Lord Penrose does not set out a comprehensive list of recommendations for the Government. Nevertheless, he does make a number of observations that merit further action. I have no doubt that Committees of this House that have taken an interest in these matters will wish to examine what further can be done, but the principle that the regulatory system—even one so recently updated—should be subject to constant review is one that we accept.
	I can announce a programme of work to build on Lord Penrose's findings. The Government accept the need to re-examine the corporate governance arrangements applicable to mutual life offices in the light of the experience at Equitable Life. I can announce a review of the governance of mutual life offices, to be led by Paul Myners, so that the boards of mutual life offices are as accountable to their members as those of comparable companies are to their shareholders.
	Lord Penrose also offers a number of criticisms of the actuarial profession. He says:
	"The profession resisted prescription. The individual judgement of the appointed actuary prevailed."
	He adds that
	"the guidance offered no standards of performance that might reflect generally accepted principles or rules of conduct such as one might have expected of a professional body."
	I can announce that Sir Derek Morris will lead a review of the actuarial profession with a particular focus on considering how best to modernise the profession and to ensure that high standards are delivered in a more open, challenging and accountable professional culture.
	I can announce also that I have asked the independent Accounting Standards Board to initiate a study into the accounting for with-profits business by life insurers. The study will have a particular emphasis on identifying ways of improving the transparency of reporting.
	Lord Penrose also argues that there is a clear responsibility on Government to inform and educate consumers about the nature of the financial system. This Government were the first in the world to incorporate consumer education as a key statutory objective of the financial services regulator. The FSA has recently stepped up its work in this area, with the launch of the financial capability steering group, which will examine the approach to consumer education from first principles.
	I have set out Lord Penrose's account of events leading to the situation in which Equitable Life found itself in July 2001. Lord Penrose finds that
	"the first and most significant failure identified in this report lay at the heart of the Society".
	However, he adds that a key lesson from the report is that
	"it is important to ensure that the continued relevance of the regulatory tools is regularly assessed in the light of a constantly developing industry, and to ensure that those tools are diligently and intelligently applied".
	"It seems not unreasonable to suggest",
	he says,
	"that those in control of any supervisory regime have a duty . . . to take steps to ensure that the systems of regulation that are in force and enforced remain relevant to the changing requirements of the industry".
	We made those changes.
	Inevitably, certain key issues arising from Lord Penrose's report, as he recognises, can be resolved only in the courts. Nevertheless, as a result of his findings we will publish and consult on draft legislation to remove any possible concerns relating to unlimited liability potentially facing Equitable Life and some other policyholders.
	We stand ready, if requested, to assist the financial services ombudsman in the resolution of any consequential issues before him and his staff. The FSA is working intensively to ensure that all its current policyholders are treated fairly.
	Looking forward, there will be a programme of comprehensive reviews on corporate governance of life mutuals, actuarial standards of performance and accounting standards. These, alongside the FSA reforms welcomed by Lord Penrose, are developing the architecture of the life assurance industry for present and future policyholders.
	It is now for the Serious Fraud Office and the companies adjudication branch of the DTI to decide whether a prosecution should follow.

Howard Flight: I am grateful to the Financial Secretary for giving us a copy of her statement at 3 o'clock this afternoon and access to the report previously at 1.30 pm. I and my colleagues cannot claim to have absorbed every detail of the 818-page report during the past two and a half hours. Manifestly, over the course of the next few days, we shall need to study the report in great detail. It deals with matters that are of huge importance to many of our fellow citizens whose lives have been so badly affected by the Equitable saga.
	The Opposition do not wish to make party political points about the grave substance of the matter for so many citizens. To say the least, I am surprised that the Financial Secretary has focused almost exclusively on the society itself and on the pre-1997 regulatory regime. That was no doubt meant to deflect criticism for regulatory failure after 1997. Surely, however, that is not an appropriate or a grown-up way for the Government to respond to a report of this nature. We should not allow ourselves to indulge in the childish game of making competing attributions of blame. We should rather work together to seek to address the harm done to innocent people, many of whom are vulnerable and elderly—[Interruption.]

Mr. Speaker: Order. Please allow the hon. Gentleman to speak. Mr. Ronnie Campbell, you are usually quite noisy and I sometimes tolerate it, but you are being even noisier than usual.

Howard Flight: Many different groups of people are involved, each with their own tale to tell: annuitants, policyholders who are not yet annuitants, those with guarantees, those without guarantees, those who joined early and those who joined late. I am sure that we will need to make distinctions in how we respond, because each group of people has been affected in a different way.
	I hope that the Financial Secretary will agree with us on two points. First, it is not appropriate for the taxpayer to make good the losses suffered by savers when those losses arise from ordinary business risks. Secondly, it is appropriate for the Treasury to make good those losses that are directly attributable to negligence or to incorrect interpretations on the part of the regulatory authorities.
	I hope that the Financial Secretary will also agree that it is important, when the state is shown to be directly at fault, that people can trust the Government of the day always to do the decent thing by those who have suffered. That was the view taken by the present Chancellor when he responded to the statement on Barlow Clowes in the House at the end of 1989. The Financial Secretary has drawn our attention to the differences between Barlow Clowes and Equitable Life, but there are striking parallels. In 1989, the present Chancellor said:
	"I welcome . . . this . . . payment to Barlow Clowes investors".
	But it is somewhat ironic that he went on to ask the House
	"why it took an internal inquiry, a departmental inquiry and now the ombudsman's investigation . . . before justice began to be done?"—[Official Report, 19 December 1989; Vol. 164, c. 204.]
	I cannot think that the Financial Secretary or the Chancellor would want, in government, to apply standards different from those that they applied to the Government when they were the Opposition.
	There can be no doubt that this report, even on a first reading, provides unambiguous and compelling evidence of regulatory failure at operational level, despite the Financial Secretary's efforts to avoid that conclusion. In paragraph 240 of chapter 19, Lord Penrose tells us:
	"There was a general failure on the part of the regulators and"
	the Government Actuary's Department. In paragraph 158 of chapter 19, he describes the Department of Trade and Industry and the Treasury as "ill-equipped" and the Government Actuary's Department as complacent.
	In paragraph 171 of chapter 19, Lord Penrose describes the regulator's
	"failure to appreciate that a change of valuation assumption . . . had real implications".
	In paragraph 187, he describes
	"short-term objectives related to support of solvency that should have alerted regulators to the Society's weakening position."
	In paragraph 209, he tells us that
	"information was not used to form a realistic appraisal of the Society's financial position",
	and in paragraph 228, he tells us:
	"Unsatisfactory answers were accepted without follow-up."
	In paragraph 232, he expresses his concern that
	"the FSA and GAD did not have sufficient independent knowledge and understanding of the Society's business",
	and in paragraph 236, he tells us that
	"regulators and GAD also failed to identify and question the adequacy of disclosure".
	I believe that the Financial Secretary is bound to accept that that is a comprehensive series of findings against the regulators at operational level. I remind her that at the time of Barlow Clowes the present Chancellor said, in the face of similar operational failure on the part of the regulators, that
	"the need for compensation is agreed"—[Official Report, 19 December 1989; Vol. 164, c. 204.]
	I hope that the Financial Secretary will now tell us what she did not tell us in her statement—that she will find a way of allowing the parliamentary ombudsman to investigate the operation of the Government Actuary's Department and other regulators to establish the extent of maladministration so that the question of compensation can be properly addressed. I hope that she will tell the House that she is willing to join hon. Members from other parties and the professional parties involved so that we may together consider how best to address the issues arising from the report.
	As responsibility for the events is shared, so should solutions be, not least because pensions and the savings that give rise to them, as well as the associated liabilities, are long-lived items that must inevitably be addressed over the span of several Parliaments. When a crisis of this kind affects a large number of people, it is of the utmost importance that we forge political consensus on the appropriate remedies so that the steps that are taken can be maintained with consistency over a long period.
	The implications of the episode are deep, because it raises issues of trust, not trust in this or any other Government, nor in this or any other organisation, and not even in this or any other particular regulatory regime, but of the trust of the ordinary family in the pensions industry, which lies at the heart of our financial system. Ultimately, it is a question of trust in capitalism and the fulfilment by the financial system of obligations that, whatever their legal status, have great moral, social and economic importance. I hope that the report's receipt will be the beginning of a process that leads to the restoration of a trust that has been sorely and dangerously diminished in recent years, and that the Financial Secretary will join us and others in a common effort to achieve that common aim.

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Ruth Kelly: I thank the hon. Member for Arundel and South Downs (Mr. Flight) for his most reasonable response and shall try to deal with his points in turn. First, however, he ought at least to acknowledge the fundamental reforms that the Government introduced in setting up the Financial Services Authority. Those reforms were long overdue, and the notion that the Government have not done everything that they can to overhaul regulation, protect policyholders and keep the system up to date is ludicrous.
	We, too, sympathise with the plight of Equitable Life policyholders, some of whom have suffered tremendous hardship. The hon. Gentleman cannot, however, argue on the one hand that the Government do not have responsibility for underwriting business failure up and down the country and fail, on the other, to acknowledge that Lord Penrose firmly pinned the blame on the society in this case. Lord Penrose said that the problem started and continued there, and was born of the society's policy. It was founded on a mistaken strategy by the society and was concealed by its officials from its own board and policyholders and the regulators.
	Lord Penrose makes it clear in this case that
	"principally, the Society was the author of its own misfortunes".
	At the heart of the society there was, as Lord Penrose says, "a self-perpetuating oligarchy" that "aggressively pursued growth" with "missionary zeal". They failed to inform the policyholders of the position of their company. They buried and concealed information from the regulators. Even their own board was kept in the dark about essential financial information, including the impact of guaranteed annuities, until 1998.
	The hon. Gentleman raises questions about the regulatory system in place. I dealt with those in my statement. Lord Penrose says
	"regulatory system failures were secondary",
	but a system failure there was—one that the hon. Gentleman's party cultivated and over which the Leader of the Opposition presided when he was a financial services Minister. As Lord Penrose states, Conservative Ministers, in an attempt to minimise the work load involved,
	"resolved . . . that scrutiny would continue to be based on the examination of the regulatory returns, and that action . . . would be reactive to what was found in the returns".
	As a result, he says—a point that the hon. Gentleman picked up—the DTI insurance division was ill-equipped to participate in the regulatory process—a deliberate decision of his Government when they were in power, and one that reflected the will of Ministers and of Parliament.
	When proposals were made to update life insurance regulations, they were rejected. In 1997 when we came to power, we inherited a light-touch, under-resourced, reactive regulatory system that lacked challenge, and we moved quickly to set up the FSA—a system that Lord Penrose calls
	"a major, comprehensive reassessment of the requirements of an efficient regulatory system for the insurance sector".
	I shall deal with each of the specific points that the hon. Gentleman raised, but first I shall quote Lord Penrose. He says:
	"I have not qualified my comments by reference to professional standards current at the time that the events occurred: that is a matter for the courts and professional bodies exercising disciplinary functions. Further, I have the benefit of hindsight . . . In seeking material from which lessons can be learnt for the future it would be impossible to restrict oneself to what individuals knew or ought to have known at any time in the past."
	The hon. Member for Arundel and South Downs argued that the DTI was under-resourced and that it could not monitor policyholders' reasonable expectations. Lord Penrose says it was it was resolved by ministerial decision that PRE would be monitored from the annual regulatory returns. Up until the FSA was in force, he says
	"regulators were never in a position to form a view on the issue".
	The hon. Gentleman quoted Lord Penrose on future profits and the fact that the FSA allowed the society to take out an implicit future profits item. Perhaps if he read further, he would see that Lord Penrose notes
	"it appears that in the context of current guidance and the regulatory framework in force, regulators could not have done otherwise".
	The hon. Gentleman argued that the point about subordinated debt should have been picked up by the regulators. If he read further, he would see that Lord Penrose says:
	"I do not criticise any of the formal steps taken of the propriety of the order granted".
	Lord Penrose makes it clear that guaranteed annuities were not the cause of the society's weakening. He accepts that the presentation of the issue was disjointed and opaque, and that even the society's own board did not fully understand it until 1998. The regulators—the Treasury, in this instance—took strong action against Equitable throughout 1998 and 1999. Equitable threatened judicial review. The regulators threatened regulatory action. In the end the regulators' view prevailed and Equitable reserved in full.
	The hon. Gentleman raised the case of Barlow Clowes. In that case, there was a finding of maladministration. The company was not trading. No compensation scheme was in place. In the case of Equitable Life, there is no finding of maladministration, the company is still trading, and a comprehensive compensation scheme is in place. The hon. Gentleman asked whether the parliamentary ombudsman should be asked to investigate the Government actuary service. He failed to notice that we have just set up a review of actuaries, including the Government Actuary's Department, under Sir Derek Morris. I wonder what else he had in mind.
	There is no new evidence in the report to suggest any allegation of maladministration or negligence. Lord Penrose does not pin the blame on individuals who, he says, have in the main operated in good faith and to the best of their abilities within the system as they found it. Principally, he says, the society was the author of its own misfortunes. Regulatory system failures were secondary factors.
	The hon. Gentleman made a last plea about trust in financial services. Perhaps I should go back to the Penrose report for a last time. Lord Penrose himself says:
	"If the proposals in hand for the future of the new regulatory system are implemented and if they are effective in practice, the major criticisms of the earlier regulatory regime will have been addressed both in relation to the general approach to regulation and in relation to the particular issues arising from the discussion of regulation of the Society."

Vincent Cable: I, too, thank the Minister for early sight of the massive report. Clearly, I have not read all of it, but I have read enough to see that there are considerable discrepancies between what it actually says and the way in which she has interpreted it to us.
	I want to deal with three specific points. First, on whether there was a regulatory failure, the key sentence in the summary, which the Minister quoted and on which she hinged her whole argument, was:
	"As for the regulatory system, I do believe that it has failed policyholders in this case."
	She interpreted that as being a criticism of the system as a whole, and as meaning that there was therefore a failure of the previous Government and the wicked, incompetent Tories, who failed to put the proper legislative framework in place. I do not need any persuading that the Tories are wicked and incompetent, but anyone who reads the report carefully will see that that is only part of the truth. Why did she not read the whole paragraph in which that sentence was embedded? The concluding sentence starts with the word "but", which is crucial:
	"But I do take the view that the system itself was not overseen . . . was not kept up-to-date, and operated in an ineffective manner."
	There is specific reference to a major scandal that arose when the Department of Trade and Industry was overseeing Equitable Life, when the DTI commissioned as its own auditor the chief executive of the company that it was supposed to be regulating. If that is not negligence, what is? Clearly, there was a system failure, but there was also negligence.
	Secondly, let me turn to compensation. The Minister said that Lord Penrose did not advocate compensation. Of course he did not, because it was not in his mandate, as paragraph 77 of the conclusions makes clear. Why did the Minister not quote a key paragraph in the conclusion in which Lord Penrose introduced the discussion on compensation:
	"However, whatever the position on compensation might prove to be in the end of the day, it is clear that many Equitable policyholders have suffered much worry and distress, and many have been and will continue to experience real financial hardship, as a result of seeing the returns they had expected from their savings very dramatically reduced"?
	That happened as a consequence of failures of regulation of the company.
	The Minister stated that the fundamental difference in respect of Barlow Clowes—I want to pursue in a little more detail the point made by the Conservative spokesman—was that there was no finding of maladministration in that official inquiry. That is simply untrue. The finding of maladministration came in a subsequent report by the ombudsman. Indeed, in a particularly trenchant paragraph, the current Chancellor of the Exchequer, commenting in Parliament in 1989, confirmed that point precisely:
	"I must ask why we have had to rely on the ombudsman to confirm . . . mismanagement, maladministration and incompetence".—[Official Report, 18 December 1989; Vol. 164, c. 204.]
	That is why we and members of the society now expect a follow-up report by the ombudsman to interpret Lord Penrose's findings. If that is not possible, why cannot Lord Penrose be asked to spend an extra three months extending his mandate to look specifically at compensation, which he was precluded from doing before? If his findings are as the Government think, they need have no worry that they will be asked to sign any cheques, so why cannot they ask him to examine that dimension?
	My third and final comment relates to the future of the society, about which the Minister said very little. As I understand it, her only practical recommendation to policyholders is that they should pursue mis-selling claims. Is she not aware that Equitable Life's policies were essentially sold by its salaried staff, not by commission agents? Any attempt to pursue a mis-selling claim must necessarily involve raiding the society's residual funds—less, of course, very large fees for the lawyers. The only recourse that she is offering is for the lenders to sue themselves. This is a hopeless outcome, and one that is totally unworthy and unsatisfactory. Not Penrose, but the Minister's interpretation of Penrose, will be alarming and demoralising to the million people who have policies with the company, and it will have very damaging long-term effects on the savings culture for millions of others.

Ruth Kelly: The hon. Gentleman has fundamentally misread the central findings of Lord Penrose's report. He made a point about regulatory failure. I accept that there was a system failure of regulation, as Lord Penrose says. That failure was the policy pursued by the previous Government, implemented according to the will of Ministers, and accepted by Parliament. Lord Penrose is specific in saying that the coincidence of system failures in this case did not lead to loss.
	The hon. Gentleman made a point about the combination of the role of chief executive and appointed actuary. If he reads deeper into the report, he will see that there was no law that could have prevented the situation from occurring at that time.
	The hon. Gentleman talked about Barlow Clowes and the fact that no compensation scheme was in place at the time. The parliamentary ombudsman made a clear finding of maladministration in that case. The previous Government did not accept liability but said that they would pay compensation out of respect for the offices of the parliamentary ombudsman, recognising that there was no other way that distress could be alleviated among the Barlow Clowes victims. Now we have a comprehensive financial services compensation scheme in place, and it pays out 90 per cent. of guaranteed policy values.
	The hon. Gentleman asked whether Lord Penrose could now investigate whether compensation should be payable, but if he had listened to my opening statement, he might have heard Lord Penrose's own words:
	"There was no mechanism that could have been devised and put into effect within a time scale that would have had regard to the wider public interest"
	that could have allowed him to investigate those issues.
	The hon. Gentleman made a point about the future of Equitable Life itself and its policyholders. Yes, they had a very difficult time and I sympathise with their plight, but the question now is what is the right thing for the Government to do. Lord Penrose identifies a prolonged and sustained period of over-bonusing in the society. His estimate is that more than £3 billion was paid out to policyholders in the 1990s. He says that that issue can ultimately be resolved only by the courts.

John McFall: The Financial Secretary will be aware that the Treasury Committee has invited Lord Penrose to give his views on his report next week. Surely it sounds the death knell for the post of appointed actuary. The report's conclusions are bitter for the many hundreds of thousands of Equitable Life policyholders. We have had prudential regulation, conduct of business and realistic reporting improvements, but all that, for Equitable Life policyholders, sadly, is locking the stable door after the horse has bolted.
	The big question today is how we can improve transparency to ensure that there is no rerun of this scandal and fraud by future managements and that when people put their money in savings they can have confidence in the system. How will the Minister and the Government work to ensure that we restore confidence in the long-term savings market?

Ruth Kelly: My hon. Friend draws attention to the appointed actuary system that was in place for a prolonged period during the 1980s and 1990s. The Financial Services Authority has decided to abolish that system, to remove from the appointed actuary responsibility for making key decisions about asset allocation and distribution in respect of with-profits funds, and to place that responsibility firmly on the board.
	My hon. Friend asks how we can restore confidence; the way to do so is to take the action required. We have made the changes that Lord Penrose thought essential to regulating the life insurance industry, and we will continue to make them. That is why we have set up a review of the mutual sector and the actuarial profession, and we are reviewing the accounting treatment of with-profits funds. My hon. Friend will know that if there are aggrieved policyholders, as undoubtedly there are, they are at liberty to pursue any claims that they feel are rightly theirs through the financial ombudsman service, which this Government put in place for the resolution of such complaints.

Kenneth Clarke: The Minister seemed with approval to quote me from the time of the Barings bank collapse, when I said that there was no failure on the Bank of England's part in respect of regulations that could protect against a rogue trader who deliberately deceived and obscured the truth. She also reminded us of the occasion on which the previous Government accepted a finding of maladministration against the Department of Trade and Industry, in the case of Barlow Clowes, and paid compensation to the innocent victims.
	Will she, therefore, clear up the seeming ambiguity in her comments on the regulators in this case? She attacks the DTI's actions before 1997 with considerable vehemence when she is making party political points, but she defends its actions when resisting the claim for compensation. She is totally silent about the Financial Services Authority and the Government Actuary during the period after 1997—the three years that led up to the revelation of the true facts about Equitable Life. Is she saying that the DTI, as regulator, made no errors or misjudgments before 1997 under the existing regime, and that after 1997, the FSA or the Government Actuary made no errors or misjudgments? When she answers that clear question—she has yet to do so—will she bear it in mind that 800,000 policyholders will not welcome party politics on this subject, and that they will want a clear description of where fault lay, including with the regulators, if part of the blame did indeed lie there?

Ruth Kelly: The right hon. and learned Gentleman makes an important point about Barlow Clowes, but unfortunately it is not right. There was a finding of maladministration, but the previous Government did not accept it. I quoted him deliberately, because in 1995 he accepted the point that no regulator can guarantee against a company that is intent on concealment, manipulation or deception. In this case, Lord Penrose sets out clearly a litany of occasions on which the regulators were not given full information, and on which the company concealed information from the policyholders and from its own board.
	The right hon. and learned Gentleman asks me to distinguish between the operation of the regulatory system and the regulatory policy. Lord Penrose is absolutely clear: there was regulatory system failure. There was a failure of policy by the right hon. and learned Gentleman's Government, in that they failed to regulate the life insurance industry appropriately. Indeed, when they were offered the opportunity to do just that in 1994, they rejected it.
	The right hon. and learned Gentleman asks about individual instances after 1997, so let me give him the details. Lord Penrose questioned, for example, whether the FSA should have granted a reinsurance treaty. On taking a closer look at the report, however, it is clear that he accepts that the company wrote a side letter that withheld information from the regulator. The FSA has said that, in such a situation, in no case would it have accepted a reinsurance treaty. The claim is made that the regulators should have taken action when the company asked for a subordinated debt agreement, but in the next paragraph Lord Penrose says that he does not criticise any of the formal steps taken, in terms of the propriety of the order granted. He accepts—and I must accept some failure here—that the FSA should have handled late joiners in a slightly more sensitive way. That criticism, too, was made by the parliamentary ombudsman when she reviewed the case, and the FSA has already accepted that it could have handled the situation more fully. However, the company has already admitted liability in that case, and a reserve for late joiners. There is no issue after 1997 in Lord Penrose's report that has not been considered by the parliamentary ombudsman, and she has cleared the Government of all cases of maladministration.

Frank Field: I thank the Minister for the announcement about the Paul Myners inquiry and the inquiry into the actuarial profession. Given the strategic importance of actuaries to the long-term delivery of our pension schemes, will the House have some say in the terms of reference of that inquiry? Do the Government accept that, whatever final decision the House may come to about compensation in that respect, there is a clear distinction between people like me, who voluntarily saved in an organisation that gave us bad advice, and the 60,000 people who, as a condition of their employment, were made to save in a company pension scheme and now find that all or most of their pension has been lost?

Ruth Kelly: I thank my right hon. Friend for his insightful comments on the actuarial profession. Although we have published terms of reference for that review today, I assure him that they are extremely broad. I am sure, too, that Paul Myners will be interested to learn of my right hon. Friend's interest in the subject of his review, and I shall refer my right hon. Friend to him. My right hon. Friend spoke of the 60,000 pensioners in the ASW case and others. He will understand that as a result of their position the Secretary of State for Work and Pensions has made it a priority to put in place a pension protection fund, through the Pensions Bill now passing through the House.

John Redwood: What would the Minister say to a constituent of hers, or mine, who has lost a lot of money and has been hanging on in the hope of something from Penrose, or Government compensation, but who now faces a very mean retirement because of those losses? Is she really saying that such people should spend what little money they have left on good lawyers, that they should just sit and hold on, or that they should get out? That is what my constituents need to know. They have been extremely badly done by, and they want an answer.

Ruth Kelly: The right hon. Gentleman must understand that it is the Government's responsibility to act on the basis of what Lord Penrose has said in his report. Of course, I entirely sympathise with the distress of individual policyholders who have suffered loss over the last four years as a result of the actions of the society. However, I can perhaps give some words of assurance about the fact that the Government have introduced the comprehensive financial services compensation scheme, which is ready, were problems to materialise in a company, to pay out 90 per cent. of guaranteed policy values. Apart from that, the financial ombudsman service is also there ready to offer help, without the expense of lawyers, to individuals who feel that they need redress.

Tony Wright: Is this not the story of a period when this country was in the grip of an ideology that said that people would be more prosperous and freer to the extent that the state did not interfere with their lives? Are not the Equitable Life policyholders now being asked to pay a terrible price for that ideology? More specifically, my hon. Friend has made an important distinction between regulatory failure and regulatory maladministration, but I am sure that she will agree that that is a proper distinction for the parliamentary ombudsman to examine, in so far as it is within her jurisdiction, and that she will want to make her own judgment on the matter.

Ruth Kelly: My hon. Friend makes some important points. Lord Penrose's report provides a cautionary tale for all hon. Members on both sides of the House. His main recommendation is that the regulatory system should be constantly reassessed and kept up to date in the light of changing developments in the industry. We set up the FSA immediately on coming to power, and alongside it we are prepared continually to review and update its effectiveness to make sure that adequate protection is in place. My hon. Friend draws a distinction between regulatory failure and operational failure, and it is one that Lord Penrose himself draws in the report. Lord Penrose is clear that the fault principally lay at the heart of the society and that regulatory system failures were secondary factors.

Norman Lamb: May I declare an interest as a former policyholder? I draw the Minister's attention to the report's key findings, which identify not only a systems failure but a specific failure by regulators operating within the system. Is it not remarkable that she failed to mention that at all in her statement and that she concentrated only on the systems failure? Her statement is a recipe for years of litigation, which will enormously benefit many lawyers but which will be at the expense of all those who have suffered enormous hardship, and will do nothing to address the crisis of confidence in the industry. It is time for a proper process through either the parliamentary ombudsman or a further remit to Lord Penrose to identify the loss resulting from the regulatory failure—not system failure—identified by Lord Penrose, so that compensation can be paid.

Ruth Kelly: The hon. Gentleman's interpretation is not correct. Lord Penrose's main finding is that there has been systematic and sustained over-bonusing in the society over a matter of decades, and perhaps even longer. As Lord Penrose says, the issue could be determined only by the courts. He specifically rules out any attempt to give him extra powers to deal with consequential issues and says that such issues could be determined only by the statutory process.
	The hon. Gentleman points to particular issues about the regulatory system and leads me to examine Lord Penrose's central findings and conclusions. Lord Penrose says that "the system lacked challenge", and he also says why. The system was set up by deliberate ministerial decision to lack resources. In 1999, 70 regulators supervised 800 life insurance companies while 400 regulators supervised 600 banks, which was a complete bias in the system. This Government have doubled the resources going into life insurance regulation and made sure that the system is set up in such a way that it now has sufficient to do the job properly.

James Plaskitt: May I refer my hon. Friend to the Treasury Committee's interim report on Equitable Life? We found that the Treasury asked the Government Actuary's Department to survey life offices in 1998. When Sir Howard Davies gave evidence, he told us that the case of Equitable Life stood out among all the others. Equitable Life did not like the regulator's comments and threatened the Treasury with judicial review. Although Lord Penrose rightly says that the society was the author of its own misfortune, does my hon. Friend think that the pre-FSA regulatory vacuum aided that situation?

Ruth Kelly: My hon. Friend makes an important point. Regulators became aware of the guaranteed annuity issue in 1997, and, in effect, the regulators and Equitable Life had a running battle over the following two years. Equitable threatened the regulators with judicial review; the regulators threatened to take regulatory action and shut the company. In the end, the regulators' view prevailed and the company reserved in full. The reason that situation did not materialise earlier is, as Lord Penrose says, that the system was not set up to allow the regulators to pick up any impact on policyholders' reasonable expectations.

Graham Brady: I, too, have a small interest to declare. The Minister refers to the statement by Lord Penrose that insulating policyholders from any kind of risk would provide a perverse incentive. On the other side of the account, does she accept that leaving people suffering loss and hardship in their retirement also provides a perverse incentive? What is her assessment of the damage that could be done to confidence in the industry and of the danger that people will simply stop saving for their pensions?

Ruth Kelly: The hon. Gentleman makes an important point, and it was one that Parliament considered when it set up the financial services compensation scheme, which acts as a comprehensive safety net for individuals in a case of insolvency. Were Equitable to become insolvent—I stress that the company thinks that it is still solvent—the financial services compensation scheme is there to meet individuals' needs and would pay out 90 per cent. of policy values. However, in addition, the financial ombudsman scheme is available, whether a company is solvent or insolvent, to pay out on the basis of individual policyholder complaints. It is to that scheme that individuals should look in the first instance if they feel aggrieved.

Nigel Beard: Equitable Life is the oldest insurance society in Britain and, in many people's eyes, was the gold standard of the life insurance industry. What are the implications for the rest of the life insurance industry?

Ruth Kelly: Lord Penrose says that the FSA, in its reforms, has anticipated many of the lessons that could have been drawn from his report. He says that it has "largely succeeded" in that. The lessons for us as a Government are to keep his report in mind to ensure that the regulatory process is constantly updated and to ensure that policyholders have the most effective system possible in place. At the same time, we must acknowledge that no regulator can guarantee against a deliberate and particular intention to conceal and manipulate by a company. No regulator could guarantee to prevent that from happening.

Richard Ottaway: Millions of policyholders listening to the Financial Secretary's statement this afternoon will be dismayed by its content and tone, and the way in which everybody seemed to be to blame except the Government. I remind the Minister of the guidance in the letter of 18 December 1998 from the Treasury's insurance directorate, which condoned, confirmed and accorded with the accounting practices of Equitable Life. That guidance was slaughtered by the House of Lords in its judgment of July 2000. However, the Treasury has always stood by that guidance and never suggested that it was wrong. Will she now take this opportunity to admit that the guidance was wrong and that Equitable Life did not operate in accordance with proper procedures?

Ruth Kelly: I have already said to the Treasury Committee, when the issue was last considered, that with hindsight it probably would have been better not to have issued that guidance. I can only cite Lord Penrose who, when he looked at the issue, accepted that the regulators' view of the guidance was that it was neutral. Indeed, he accepted that the regulators thought that the guidance could act as a warning shot across the bows of Equitable. He accepts that that is the case, and that was the view that was held by regulators at the time.

Harry Barnes: There is the widest possible distinction on the issue of regulation between the former and current Governments—I hope that we will hear less bleating from the Conservatives about red tape—but Governments are a seamless whole as far the public are concerned. Do we not often have to clear up the mess that was created by the Conservatives? That needs to be taken into account in connection with the Equitable Life policyholders, and we may have some responsibility to deal with their problems.

Ruth Kelly: The distinction is fundamental, and it is essential for the Government of the day to get it right. There is a clear separation between policies, which are dreamed up and implemented by Ministers of the day, with Parliament's support—effectively representing the will of Parliament—and the operation of a regulatory system that can lead to circumstances in which policy is not effectively implemented and does not represent the wishes of Ministers and Parliament. That is a distinction that Lord Penrose makes when he says that in this case the problem was regulatory system failure: it was the policy that was the cause of the problem.

Mark Field: Will the Government find a way to enable the ombudsman to investigate the serious regulatory failure of the Government Actuary's Department, which was identified in Lord Penrose's report?

Ruth Kelly: The ombudsman has already considered the position since 1997 and found no evidence of maladministration. The hon. Gentleman should look more carefully at the Hansard report of my original statement. I pointed out that Lord Penrose himself made serious criticisms of the actuarial profession—not least the fact that one appointed actuary was reluctant ever to criticise the opinion of another appointed actuary. Lord Penrose also said that the profession was set up in such a way that there were no standards of discipline of the type that are normally accepted as applying to any professional body. That is why the Government have set up an independent review to examine the actuarial profession, and it will include the Government Actuary's Department.

George Mudie: I genuinely commend the Minister and other Treasury Ministers on dealing with the political and technical aspects of the problem, but I genuinely put down a marker on my concern about the humanity of the position. This is the second time in a week that the House has debated the plight of ordinary pensioners who now have to face life on reduced pensions. That is their reward for doing exactly what the House has urged them to do—to put money aside and save for pensions. I acknowledge that the Minister has set out an able case against compensation, but the prospects for Equitable Life pensioners now hinge on succeeding in legal action against the directors and auditors. That will take years and will enrich only the lawyers. It will in no way help the ordinary pensioners who are now living on reduced pensions.
	Will the Minister and other Treasury Ministers speak to the FSA to establish whether it can do something similar to what it did last week to the split capital investment industry—by knocking some heads together? They should try to bring some help not only to people affected by Equitable Life, but to the pensioners we spoke about last week, who look to us not for technical or political arguments, but for help to maintain their standard of living.

Ruth Kelly: I understand my hon. Friend's empathy for the policyholders in Equitable Life and I share it. It is difficult to see people suffer financial hardship and stress, but my hon. Friend must also be aware of the scale of the problem that we face. Lord Penrose identified a problem that was driven primarily by management failure at the society itself. That is what led to £3 billion extra being paid out in bonuses than the society could afford. Of course the Government stand ready to help where we can and where appropriate in that context. Indeed, I have personally spoken to the financial ombudsman to see whether there is any more we can do to help people as they pursue any consequential claims through his office. The reason we set up the financial ombudsman service was to provide an avenue for people to seek speedy resolutions of their complaints.

Chris Grayling: Is it not curiously ironic that the one person who was successful in extracting money from Equitable Life pension funds after 1997 was the Chancellor of the Exchequer? When the company was pulling the wool over the eyes of the regulator in the early 1990s, the system was supposedly to blame; but when the company was still pulling the wool over the regulator's eyes at the end of the decade, the post-1997 Labour-introduced regulatory system was entirely blameless. Does the Minister honestly believe that the policyholders will think that that is credible?

Ruth Kelly: The hon. Gentleman suggests that the society was pulling the wool over the eyes of the regulator, but in fact Lord Penrose set out a litany of ways in which the company failed to disclose information to the regulator. For example, it failed to disclose in 1992 with the quasi-Zillmer adjustment—and it went on from there. It also failed to disclose information about a side letter written on reinsurance agreements under the stewardship of the FSA. However, the Penrose report found no maladministration or negligence by the regulator and also states clearly that no discrete actions by the regulators led to loss. It was not the regulatory system that was responsible for policyholder loss, but the action of the society itself.

Alan Howarth: Wherever responsibility may lie for the disasters that have so devastatingly affected Equitable Life policyholders, does my hon. Friend agree that it may have contributed to a dangerous undermining of confidence in pensions more broadly, and that there is an urgent need to rebuild that confidence? Over and above the regulatory improvements that the Government have already brought in, will the Treasury act to improve incentives for savers who are not high earners, perhaps by replacing tax relief with grants, for example? Will the Treasury also offer incentives to employers to contribute more generously to the pensions of those who work for them, as well as to provide financial education and financial planning advice in the workplace?

Ruth Kelly: My right hon. Friend makes an important point. That is why in 1997 we took immediate action to set up the FSA. We also set up the comprehensive financial services compensation scheme, and the financial ombudsman service to help people with speedy resolution of their claims. Confidence in the financial services industry will be restored by an effective regulatory system that is updated adequately to reflect movement in the industry. As for the subjects that my right hon. Friend mentioned, workplace advice, for instance, is very close to my heart. We are consulting on ways to make that work better so that employees can receive appropriate advice in the workplace. We shall keep under review—as, indeed, will Adair Turner as head of the Pensions Commission—all ways of promoting pensions in the workplace.

Henry Bellingham: I represent a large number of victims, many of whose lives have been ruined as a result of this matter. The shadow Chief Secretary asked the Minister about the Government Actuary's Department, which saw Equitable's returns and gave it a solid rating every year—both before 1997 and for four years after that, at which stage the deterioration in the company's balance sheet became apparent. Surely the Government Actuary's Department is to some extent culpable. How much responsibility should it carry?

Ruth Kelly: The Government Actuary's Department acted as advisers to the regulator. I have already set out the inadequacy of resources given to life insurance regulation over a prolonged period. It was natural that the regulator, when completely under-resourced, should rely on 20 Government actuaries for support. The hon. Gentleman also asked about the case after 1997. We took immediate action as a Government to set up the FSA; we have doubled the resources to life insurance regulation; we have increased the skill levels for carrying out life insurance regulation; and we stand ready to make any changes on the back of Lord Penrose's recommendations.

Betty Williams: Like many Members, I have waited a long time for this report to be announced to Parliament. I welcome my hon. Friend's announcement today of an independent review. I believe that I have understood her point about the failure of the regulatory system pre-1997, but for the benefit of Conservatives Members who were in government before then will she once again reiterate—I know that she has done so several times already—the point about the regulatory system? I am very angry on behalf of the constituents who have written to me when I hear such an announcement and what Lord Penrose said in his report.

Ruth Kelly: As a result of Lord Penrose's report, the House will want to take time to reflect on whether it was appropriate to have a light-touch regulatory system for the protection and care of long-term pensions held by millions of people in this country. Lord Penrose says:
	"I do not pin that blame on individuals, who in the main have operated in good faith and to the best of their abilities within the system as they found it."
	He adds that, primarily, the company was the
	"author of its own misfortunes",
	and that
	"regulatory system failures were secondary factors."

Andrew Love: Did my hon. Friend have a chance to read the Financial Times over the weekend, in particular the comments of its respected City analyst on pensions? He said that
	"despite the problems, the return on an Equitable pension might be no worse than on one bought through any other poorly-performing life offices.
	Many life offices are paying zero bonuses, so Equitable policyholders may be no worse off than some of those with the competitors . . . If that's a case for compensation, I can't see it."
	That is the voice of a reputable, independent expert from the City. Would my hon. Friend care to comment?

Ruth Kelly: I hear what my hon. Friend says, but he must agree that Lord Penrose's central finding was that the company was the author of its own misfortunes. It paid out £3 billion more in bonuses than it could afford over a prolonged period. That has clearly had a differential impact on policyholders, depending on when they joined or left the company. In this case, however, it is very much the society itself that is under the spotlight.

Barry Gardiner: Lord Penrose has accused the management of the company of manipulation, concealment and serious omission. Is not that just another way of describing the current state of the actuarial profession? I am sure the whole House will welcome my hon. Friend's announcement of the report by Derek Morris on the actuarial profession. Can she tell us when she expects to receive that long overdue and much to be welcomed report?

Ruth Kelly: I cannot agree with my hon. Friend's detailed point, although Lord Penrose suggests that the actuarial profession is in need of review. However, I can tell him that the review process should be completed by spring next year.

Points of Order

Tim Loughton: On a point of order, Madam Deputy Speaker, of which I have given prior notification to Mr. Speaker. Last Thursday afternoon, it appears that I was the subject of not one but two points of order from Labour Members. On Friday morning, I received a letter from the hon. Member for Harwich (Mr. Henderson) informing me that I was to be the subject of a point of order on the previous day. Apparently, the hon. Gentleman took issue with a visit that I made to his constituency as a shadow Health Minister, at the invitation of local residents and of Mr. Douglas Carswell, the excellent Conservative parliamentary spokesman in that constituency. The hon. Gentleman was told about my visit, as is my custom—a courtesy that has never been extended to me by any Labour Ministers or Liberal Members of Parliament visiting my constituency.
	In Mr. Speaker's response to that notified point of order, he referred to a convention about Members being involved in colleagues' constituencies or those of other Members. However, when my hon. Friend the Member for Worthing, West (Peter Bottomley) pointed out that I was visiting as a shadow Health spokesman and that it was common practice during the previous Conservative Government for Labour Front Benchers to ask questions about the constituencies of other Members, Mr. Speaker said that that was an entirely different matter.
	There thus seems to have been a degree of confusion as to what hon. Members can or cannot do outside their own constituency. Given the practice, especially of the Department of Health, of answering questions tabled by my hon. Friends and me by saying that information is not collected centrally, thereby requiring us to ask for information about individual constituencies or primary care trust areas, it would be exceedingly damaging to the availability of information to Opposition Members if we were unable to ask such questions. Perhaps, Madam Deputy Speaker, you can give us some—

Madam Deputy Speaker: Order. I think that we have heard the point of order that the hon. Gentleman is making.

Roger Gale: On a point of order, Madam Deputy Speaker.

Ivan Henderson: rose—

Madam Deputy Speaker: Order. May I first respond to the point of order raised by the hon. Member for East Worthing and Shoreham (Tim Loughton)?
	I really have nothing to add to the rulings that Mr. Speaker gave on Thursday, when he said that these things are best dealt with between Members and not on the Floor of the House.

Roger Gale: On a point of order, Madam Deputy Speaker. Mr. Speaker had occasion to rebuke me for seeking to raise this point of order earlier during what I had forgotten was an answer to an urgent question, not a ministerial statement, for which I unreservedly apologise.
	Earlier this afternoon, a Minister of State quite disgracefully criticised civil servants in her Department for failing to inform her until yesterday of matters that she should properly have heard about in January. Madam Deputy Speaker, you would immediately rule that it is up to Ministers to take responsibility for what they say—I understand that—but could you reaffirm the convention that Ministers should take responsibility for their actions, and the fact that it always has been the convention of the House that Ministers do not come to the Dispatch Box and criticise civil servants who do not have the opportunity to answer for themselves?

Eric Forth: Further to that point of order, Madam Deputy Speaker. May I invite you to go somewhat further than my hon. Friend suggests in extending the protection of the Chair in the Chamber to civil servants who are unable to protect themselves—indeed, they are unable to speak for themselves—when attacked by their own Ministers? Surely that is something for which the occupant of the Chair can rightly and honourably take responsibility. Today, we had the most disgraceful example of a Minister of State dumping on her own officials. Surely that is unacceptable.

Madam Deputy Speaker: I have to tell right hon. and hon. Members who have raised that point of order with me that the way in which Ministers answer urgent questions is entirely their responsibility. It is not the responsibility of the occupant of the Chair.

Ivan Henderson: Further to the point of order raised by the hon. Member for East Worthing and Shoreham (Tim Loughton), Madam Deputy Speaker. If the hon. Gentleman had gone to the notice board on Thursday afternoon, during Question Time, he would have seen his letter there. I am not responsible for when he receives his mail in his office. If he, like other hon. Members, had contacted the hon. Member responsible when issues are raised on behalf of constituents, he would have got the answers that he required, including on the £7 million investment in the primary care trust in my area.

Madam Deputy Speaker: I repeat what I said earlier. Mr. Speaker gave his ruling in the House last Thursday. I have nothing further to add—certainly, nothing on the matter of when Members do, or do not, collect their post.

Gwyneth Dunwoody: Further to the point of order that was raised by Opposition Members, Madam Deputy Speaker. There has been a long tradition—this may be unwritten, but it is very important—that the House does not attack those who cannot answer back and that the use of privilege is carefully protected because it involves a very great responsibility. We have the right of privilege. We are able to say what we think here and to be protected. I hope that the House will be reminded from time to time that that tradition includes not having a go at those who cannot protect themselves.

Madam Deputy Speaker: I can only repeat what I said earlier: the responsibility for replies to urgent questions lies with Ministers themselves.

EUROPEAN PARLIAMENTARY AND LOCAL ELECTIONS (PILOTS) BILL (PROGRAMME) (NO. 3)

Motion made, and Question put forthwith, pursuant to Orders [28 June 2001 and 6 November 2003],
	That the following provisions shall apply to the European Parliamentary and Local Elections (Pilots) Bill for the purpose of supplementing the Orders of 21st October 2003 and 29th October 2003:
	Consideration of Lords Amendments
	1. Proceedings on Consideration of Lords Amendments shall be completed at today's sitting and shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement.
	Subsequent stages
	2. Any further Message from the Lords may be considered forthwith without any Question put.
	3. Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—[Jim Fitzpatrick.]
	The House divided: Ayes 265, Noes 150.

Question accordingly agreed to.

Orders of the Day
	 — 
	European Parliamentary and Local Elections (Pilots) Bill

Lords amendments considered.

Clause 1
	 — 
	Piloting Conduct at European and Local Elections

Lords amendment: No. 1.

Christopher Leslie: I beg to move amendment (a) to the Lords amendment, in line 15, at end insert—
	'(c) Yorkshire and the Humber;
	(d) North West.'

Madam Deputy Speaker: With this we may discuss Lords amendments Nos. 2, 4 to 12, 14 to 20, 22, 24 to 43 and 45 to 50.

Christopher Leslie: This large group of amendments brings the Bill up to date. Apart from the issue dealt with in our amendment, we agree with their lordships on the need to name in the Bill the regions to pilot all-postal voting. The amendments negate the need for an affirmative order by naming all-postal voting as the method of piloting and specifying the choice of pilot regions. That has allowed greater parliamentary scrutiny and means that electoral administrators will be able to plan with certainty without having to wait for an order to be brought before both Houses.
	Government amendment (a) reinstates Yorkshire and the Humber and the north-west as pilot regions, supplementing the north-east and the east midlands as the Government's preferred four regions for piloting, as I announced in January. Although their lordships opted for only two regions, I shall explain why I hope that the House of Commons will settle on four regions and why this can be the final word on the matter.

Gwyneth Dunwoody: Is my hon. Friend perfectly satisfied that there is sufficient time for the regulators to ensure that the machinery is in place in the north-west, because it was thought that we would not be included in the pilot scheme? Although many of us approve of postal voting, we are worried about people acting fraudulently to change the results in those constituencies where, for one reason or another, the vote is close.

Christopher Leslie: I hope to put my hon. Friend's mind at rest by quoting the regional returning officer for the north-west. I shall come to his specific comments and how he is content to have all-postal voting in the north-west shortly. However, it will help if I first remind the House why we are considering the issue.
	Turnout in local and European elections has been low for some time. As society evolves, it is important that our democracy can also evolve to match the lifestyles and needs of the public. We have a responsibility to make the process of casting a vote as convenient and simple as possible. The more obstacles in the way, the fewer will cast a vote, and the less likely it is that elected politicians will receive a resounding mandate if turnout continues to weaken.
	One of several reforms that could help is improving the physical mechanisms of voting. Taking the choice to the elector instead of always requiring the elector to seek out the polling station is a tactic worth trying. I emphasise that that is worth trying because we are talking about pilots.

Graham Brady: It is a tactic worth trying. The independent Electoral Commission agreed with that. Irrespective of the north-west and Yorkshire and the Humber, the commission
	"felt unable to make a positive recommendation in respect of those regions"
	in the pilot exercise. As recently as last week, it was still saying that it felt that those regions were unsuitable to run postal pilots. Why will the Minister not take seriously the independent advice of the Electoral Commission?

Christopher Leslie: I shall come to that point. The hon. Gentleman is misrepresenting the Electoral Commission's position. It is not saying that Yorkshire or the north-west are not suitable. On the contrary, it is saying that they are potentially suitable. It has said that all along. I shall deal with these points in more detail later in my remarks.

Graham Brady: Will the Minister give way?

Christopher Leslie: No. I shall make some progress on this matter.

Graham Brady: On a point of order, Madam Deputy Speaker. The Minister has accused me of misrepresenting the views of the Electoral Commission, yet I have a letter dated 4 March from the chairman of the commission to the Minister. I was quoting from that letter, in which he says:
	"The remaining four regions (excluding London and Northern Ireland who were not part of this exercise) we felt were unsuitable to run all postal pilots."
	I ask the Minister to apologise to me for the allegation that he has made.

Christopher Leslie: That was the correct representation—[Interruption.]

Madam Deputy Speaker: Order. I think that we have the gist of the point made by the hon. Member for Altrincham and Sale, West (Mr. Brady). Perhaps the Minister will respond. It is a matter for the Minister and not one for the Chair.

Christopher Leslie: It is always the last refuge of the hon. Gentleman to resort to a point of order to make his political point. However, he is wrong about the Electoral Commission so I shall not apologise. I shall read from the letter that he quoted. The commission states:
	"We named a further four regions that were potentially suitable as pilots. These were, in order of suitability, Scotland, Yorkshire and the Humber, the North West and West Midlands."
	The other four regions were those that were deemed to be not potentially suitable. I hope that that clarifies the situation for the hon. Gentleman.

Patrick Cormack: This is not good enough. I had the opportunity last week to talk personally to Mr. Sam Younger, the chairman of the Electoral Commission. Among other things, I discussed this matter with him. He made it plain that he thought that two pilots were enough. He accepted three at a stretch, but certainly he preferred two. He made his advice unequivocal and plain. The Minister has decided to discard that advice. Why?

Christopher Leslie: The hon. Gentleman is more circumspect in the way that he describes the position of the chairman of the Electoral Commission. I, too, had discussions with the chairman last week. The hon. Gentleman is right to say that there is disagreement about how we define a pilot—whether it is two, three or four regions.
	I return to the letter. The commission writes:
	"We named a further four regions that were potentially suitable as pilots. These were, in order of suitability, Scotland, Yorkshire and the Humber, North West and West Midlands."
	It felt unable to make a positive recommendation in respect of those regions, but it stated that they were potentially suitable. It is wrong to say that the commission was saying no to Yorkshire or no to the north-west. That is not the right characterisation of the commission's position.

John Gummer: Will the Minister give way?

Christopher Leslie: I should like to make some progress—[Interruption.]

Madam Deputy Speaker: Order. The Minister is not giving way.

Christopher Leslie: We shall have plenty of opportunity, if I might make some progress, to delve into some of these issues. I will certainly give way to the hon. Gentleman—[Interruption.]

Eric Forth: The right hon. Gentleman.

Christopher Leslie: Indeed, the right hon. Gentleman. I shall do so later.
	We want to be sure, through piloting, that we can both increase the convenience of casting a vote and maintain public confidence in the security of our voting systems. That is what we are talking about. Piloting is about learning lessons. The more experience we have, the better will be the final outcome of policy. Pilots so far have been small in scale. We have always said that the Bill is about scaling up to regional level.

Lindsay Hoyle: What representations has my hon. Friend had from local authorities, either through the leaders of those authorities or through the chief executives within the north-west, in support of a pilot scheme?

Christopher Leslie: Later, I shall quote at length to show that we have had positive support, especially from authorities in the north-west of England, in favour of all-postal voting. I know that my hon. Friend will welcome that.
	It is important that we underline the view of the Electoral Commission, which advised us about which of the regions would be the most suitable candidates. It did not merely recommend two regions that it considered suitable without referring to anywhere else. The commission made a number of recommendations and, broadly speaking, they were split into three categories. First were the regions that were positively recommended, second were regions that were potentially suitable and third were regions that were not suitable. We accepted those regions that were described as positively recommended back in December—the north-east and the east midlands. We then worked through those regions that were described as potentially suitable in the order of ranking as set by the Electoral Commission.

Michael Spicer: As the Minister has thrown the main conclusions of the Electoral Commission into the dustbin, why is he wasting the time of the House telling us other things that the commission has said when he obviously does not believe in much of its views anyway?

Christopher Leslie: I am not sure that the hon. Gentleman is listening to what I am saying. I do not follow his intervention. Perhaps it will become clearer later.

John Gummer: What my hon. Friend the Member for West Worcestershire (Sir Michael Spicer) says goes to the gravamen of the issue. Many of us are unhappy about the entire proposal. We think that, if people do not vote, it is because they think that the operation of the local authority is not sufficiently interesting to them, not because they cannot find the polling station. We are prepared to go along with the Minister to some extent if the independent Electoral Commission made the suggestions to which he referred. However, if he undermines what the commission has said, many of us who have been prepared to give the proposals a try will say to ourselves, "It has ceased to be an independent operation. Once again, it has become something manipulated by the Government for reasons which sometimes we do not understand but no doubt there is some reason for it." The Minister could say, "This is what the commission suggested. It has said that that is not suitable. Therefore, let us move forward on the two suggestions that it has made."

Christopher Leslie: The right hon. Gentleman would be the first person to chastise the Government if we abrogated our responsibility and passed decision making to the Electoral Commission, rather than having the buck stop here with decisions being made in the House. Ultimately, the commission gives advice. We listen to that advice, but we have a responsibility to make our own decisions, for which we are accountable to the electorate. That is an important principle—I know that the right hon. Gentleman would not wish to disagree with that.

John Gummer: There is a reason why matters of electoral reform should be decided as independently as possible. It is because no Government can pretend that they are not party politically pressed. When they make a change of the sort that is proposed, it must lead people to believe that the Government have done it for party political advantage. That is what Governments are about.

Christopher Leslie: I am surprised by the right hon. Gentleman's approach. The Electoral Commission has said that it does not wish to make final decisions. It gives advice but it is ultimately a matter for Ministers and Parliament to make decisions. That is a sensible constitutional approach.

Frank Field: Does my hon. Friend accept that we should all come to the debate troubled, in that an ever increasing number of voters are totally uninterested in what we and other representative organisations do? Does he also accept that we should seriously turn our minds to how we might bridge the gap between our electors and ourselves? As the Government have made the decision, regardless of whether it was exactly what the Electoral Commission said or whether it extended that advice, some local authorities have already begun to plan for the elections on the basis of what the House said would be the basis on which the elections would be held. It should trouble us all that perhaps next time a majority of voters will not even turn out to elect us. Would it not be good for the Opposition on this issue to accept that we are searching for different ways to engage with them?

Christopher Leslie: My right hon. Friend articulates the position relatively well. We must all, regardless of party, be conscious that the lower turnouts in local and European elections are a matter of concern.

Frank Field: In general elections as well.

Christopher Leslie: Indeed. One way of addressing that is through all-postal voting, and it is worth piloting that to try it out, which is what the Bill seeks to do.

John Bercow: Will the hon. Gentleman give way?

Christopher Leslie: No, because I should like to make some progress.

John Bercow: I should be very grateful.

Christopher Leslie: I will not give way.

Madam Deputy Speaker: Order. However grateful the hon. Member is, the Minister is not giving way.

Christopher Leslie: I should like to make some progress.
	We considered the Electoral Commission's recommendations on which regions were potentially suitable in the order in which they were recommended. We considered Scotland in some depth, and held meetings with the regional returning officer and electoral administrators with a view to allaying the concerns that they had expressed. Unfortunately, and despite Government assurances, Scottish administrators were not convinced that effective pilots could be held there, so the decision was taken not to impose a pilot in Scotland. Meetings with the regional returning officers and senior electoral officials from Yorkshire and the Humber and the north-west, however, showed that both regions felt operationally capable of running a pilot.

George Foulkes: We are disappointed that there is not to be a pilot in Scotland. In a recent by-election for South Ayrshire council at which there was a postal vote pilot, the turnout was higher than 60 per cent., more than twice what it was in the previous year's council elections. That by-election was a Conservative win because of the way in which the vote went on that particular day, and I make no protest at that, however foolish the voters may have been. However, we should all be pleased that more people voted in that pilot scheme. To hear Conservative Members say that we are carrying out the scheme for party political advantage is rich, coming from them. They want to stop people voting, for their party political advantage, and it is about time we shouted that from the rooftops.

Christopher Leslie: I know that my right hon. Friend is disappointed that we are not proceeding with all-postal voting in Scotland, but we would have been wrong not to listen carefully to the views of the administrators on the ground—the regional and local returning officers. It was on that basis that we decided not to proceed in Scotland. However, following discussions with officials in Yorkshire and the Humber and in the north-west, we decided after much thought that all-postal voting should be tested in those regions. We have worked as hard as we can to address some of the concerns of members of the Electoral Commission and others to make certain that we can proceed safely with all-postal voting pilots in Yorkshire and the Humber and in the north-west.

Graham Stringer: I am following my hon. Friend's arguments carefully, and I shall vote in the same Lobby as him this evening. However, since the original debate in the House, the Disability Rights Commission has presented evidence to the Select Committee on the Office of the Deputy Prime Minister, showing its extreme concern that all-postal ballots are discriminatory unless specific alterations to the process are made. Has my hon. Friend had time to consider its recommendations?

Christopher Leslie: I have had time to consider representations from various disability rights organisations. Some are keen on all-postal voting because there are physical impediments that make it difficult for some people with disabilities to go to polling stations. There are pros and cons on both sides, but the Government feel that to try out all-postal voting is a good way to proceed.

Jon Trickett: On that point, many people in Yorkshire welcome this initiative, particularly those who represent coalfield areas. In my constituency, which is at the heart of the former Yorkshire coalfield, two out of five households include at least one person with a long-term sickness or disability. Those people want to be treated the same as the rest of the population, not differently, and it seems to me, speaking on their behalf, that an all-postal vote for everyone is the best way of removing discrimination. Does the Minister agree, and will he accept my assurance that we in Yorkshire are willing to proceed as quickly as possible?

Christopher Leslie: Postal voting is popular for various reasons, some of which my hon. Friend articulates. I believe that it is now right to scale up piloting from local authority to regional level, which is, precisely and simply, what we are trying to do.

John Bercow: Given that, to most casual observers, a postal vote must necessarily constitute a vote cast by post—presumably on that, if on no other point, there is unanimity in the House—can the Minister tell us, with reference to proposed new subsection (4) in Lords amendment No. 1, in what circumstances one would use
	"other such means as is specified in a pilot order"?
	According to what criteria would such methods, rather than the conventional postal method, be chosen?

Mr. Deputy Speaker: Order. Before the Minister replies, may I remark that interventions seem to be getting very long? As there is limited time for the debate, may I urge a little more reversion to the idea of an intervention, which is brief?

Christopher Leslie: I can tell the hon. Member for Buckingham (Mr. Bercow) that the draft statutory instruments that we have already published, and on which we consulted the Electoral Commission, specify that although the elections will be all-postal, there will still be opportunities for people to leave their postal votes at designated drop-off points in a local authority area. I suspect that proposed new subsection (4) in Lords amendment No. 1 refers to that means of supplementing the postal system.

Nicholas Winterton: Will the Minister turn his attention to the concern that many of us feel about the integrity and security of the electoral register and, what is more, to whether that integrity and validity would be subject to abuse in a postal vote? According to a conversation that I had with the chairman of the Electoral Commission, he is concerned that a system is not in place to prevent fraud and the abuse of the electoral roll and the postal voting process.

Christopher Leslie: I am glad that Conservative Members have had conversations with the chairman of the Electoral Commission, which is heartening. The hon. Gentleman makes some interesting points, the first of which concerns the electoral register. That is an important issue, regardless of whether we are talking about an all-postal or a conventional election. His second point, however, relates more directly to postal voting: concerns have been expressed about whether all-postal voting is more prone to fraudulence or malpractice.
	I want to consider the Electoral Commission's views. It has stated that the two additional regions of Yorkshire and the Humber and the north-west are "potentially suitable", but that it does not feel able
	"to make a positive recommendation"
	on their suitability. It would therefore be useful to examine what held the commission back from making those positive recommendations, and what has now been done to address those issues. Starting with Yorkshire and the Humber, the commission noted positively that the region has "solid piloting experience", that it has
	"no particular barriers to service delivery and is served by good transport links",
	and that it has a
	"strong daily and weekly press . . . coupled with a clear regional identity".
	However, the commission raised queries about the fact that
	"some parts of the region have reported that fraud and the perception of fraud has risen since the introduction of postal voting"
	on demand, and said that
	"it is clear that Returning Officers would strongly prefer not to be involved".
	That is how the Electoral Commission explained why it held back from making a positive recommendation on Yorkshire. Its points are valid, and we have been working hard to address them. Much is being done at a national level, but it may be worth while to illustrate what is being done locally in Yorkshire. I recently wrote to its regional returning officer, as well as the regional returning officers in the other pilot regions asking them to update me on their preparations. On the subject of fraud, Paul Rogerson, chief executive of Leeds city council and regional returning officer for Yorkshire and the Humber said that
	"discussions between the Region's electoral administrators have been held regarding anti-fraud safeguards. The provisions within the Bill have been noted and welcomed and a number of specific measures are being considered for adoption, including sample checks of those shown as having returned ballot papers, the mounting of local elector awareness campaigns, the establishment of hot line contact points, regular liaison with the Police and the Electoral Commission, the training of staff in supported delivery points, arrangements for the safe delivery of papers to electors in houses in multiple occupation, and checks to be made where multiple requests for the redirection of ballot papers are received."

Nick Hawkins: Given that the Minister is quoting extensively from a letter that the House has not seen, will he undertake, particularly in light of the fact that he has already been caught out this afternoon indulging in selective quotation, to ensure that the full text of all correspondence on which he seeks to rely is placed in the Library, together with the full minutes of any meetings that he or other Ministers have had with any returning officers or the Electoral Commission?

Christopher Leslie: I shall certainly make available to the hon. Gentleman the letters from which I am quoting, as they are useful to my case. Indeed, I wish I had time to circulate them to hon. Members during our debate.

Nicholas Winterton: Will the Minister place them in the Library?

Christopher Leslie: If I place them in the Library, perhaps hon. Members will be able to go and read them before we vote. I am not sure how efficient my officials will be, but we shall see what we can do. The important point, however, is that the regional returning officer in Yorkshire addressed concerns about fraud. In relation to the commission's point about whether returning officers were willing to participate in postal votes, he said:
	"I can report that preparations for the proposed pilot are well underway and that, as might have been expected, electoral administrators from across the region have responded to the challenge presented to them by last month's announcement with their usual diligence and commitment. Indeed, in this regard, I can advise you that, whereas the region's electoral administrators were not initially supportive of an all-postal pilot (for reasons with which you are familiar), the view of a significant majority of the same administrators today is that they would prefer to be allowed to proceed with arrangements for an all-postal ballot in June, than now be constrained to revert to planning for a conventional election."
	When discussing its recommendations, the Electoral Commission clearly does not rule out Yorkshire and the Humber as a pilot region and, indeed, has since said in discussions that the region and others marked as "potentially suitable" could deliver an effective pilot. In short, it is quite clear that any doubts about Yorkshire's suitability, whether over fraud or returning officer enthusiasm, have now been overcome.
	As for the north-west, the commission noted positively that
	"there is a strong record of piloting in the North West—18 of 33 authorities have piloted".
	It also noted that the north-west returning officer
	"has submitted his view that the North West would be well placed to hold an all-postal pilot, and that he would ensure that appropriate resources were put in place to deliver the pilot scheme"
	It also noted that the region is diverse, has a strong daily and weekly press and ranks highly for the distinctiveness of its radio services. The commission had several worries however, and said:
	"There have been several allegations of electoral fraud in the North West in recent years . . . Some of these investigations could proceed to court in early 2004; this would be likely to produce unfavourable publicity about the security of postal voting".
	It was concerned that
	"the support for a pilot scheme does not extend across the whole of the region, given the high number of local elections scheduled for 2004".
	Given that large number of elections, it was therefore concerned that
	"the complexity of the region would be a disadvantage".

John Pugh: rose—

Christopher Leslie: I should like to address each of the commission's concerns in turn, but before doing so I shall give way to the hon. Member for Southport (Dr. Pugh).

John Pugh: As the Minister has partly suggested, 80 per cent. of the north-west has atypical elections using two different electoral systems, so their council elections are not characteristic. Is it not perverse to choose the north-west, as the complications are surely greater there than anywhere else?

Christopher Leslie: As I shall seek to explain, if we shy away from complexity and conduct pilots in simple areas with single elections, we avoid the purpose of piloting, which is to learn lessons and build on experience. Complexity can therefore be useful to piloting.
	As for the fraud issue raised by the Electoral Commission, it will be useful to quote Sir Howard Bernstein, chief executive of Manchester city council and regional returning officer:
	"We are committed to taking every possible step to preserve the integrity of the postal ballot. As I have indicated before, Local Returning Officers are keenly aware that the potential for fraud is something which must be managed irrespective of whether a pilot takes place or not. The police have indicated to me that additional vigilance and early intervention are essential to reduce the opportunities for fraud. We are therefore all working hard with colleagues from the police to develop protocols and programmes on how best fraud can be prevented; this will include checks on returned envelopes and any additions to the electoral register; systems to alert us to a proliferation of proxies or changes of address, and special delivery arrangements to houses in multiple occupation."
	As for whether or not there was widespread support from local returning officers, Sir Howard Bernstein wrote:
	"I have been very impressed by the consistent and positive attitude all Local Returning Officers have shown to the proposed pilot here in the North West . . . we convened a meeting of all LROs towards the end of last year to discuss the principle of a pilot and everyone present (42 of 43 local authority areas) committed themselves to work to a successful outcome . . . Since your announcement that this region should be a pilot we have met all LROs at a sub-regional level, and their positive approach to the issues has again been demonstrated. We are doing everything we can to ensure that the pilot is a complete success."
	I apologise for the length of the quotations, but I think that they are important, as they record the views of independent returning officers, who are responsible for administering all-postal voting in those regions. I have every confidence and faith in their ability to deliver and do the job that they have done in the past. As for the point about complexity, if all-postal voting is ever to move on from a pilot stage, we must be prepared to test in areas that are complex as well as those that are simple.

Patsy Calton: On a connected issue, is the Minister convinced that the postal services are capable of coping with the increased amount of mail that they will have to deliver? There is evidence in my area that they have not been able to do so in previous elections.

Christopher Leslie: We have been in close dialogue with Royal Mail, and have had a number of assurances in writing, both at regional and national levels, from its officials that they are capable not only of living up to the challenge but of exceeding expectations. They have given a guarantee to run the scheme as efficiently and effectively as possible. The Bill, however, allows the Electoral Commission to study the pilots after they take place to make sure that they can verify exactly what happens in the June elections.

Gwyneth Dunwoody: I am still concerned about houses in multiple occupation, particularly groups of old people living together, and should like reassurance about the collection of those votes. Of course, Sir Howard's returning officers will commit themselves to a positive reaction—they would hardly commit themselves to a negative one.

Christopher Leslie: My hon. Friend is right. I am glad that there is enthusiasm on the part of returning officers, and it is helpful to ensure that they are keen. My hon. Friend makes a reasonable point about houses in multiple occupation, an issue that we considered in Committee and on Report, and which was also dealt with in another place. We have been able to give assurances about delivery mechanisms and the extra attention to be paid to those issues. I will certainly make sure that we continue to monitor the plans that regional returning officers have for people living under one roof or in houses in multiple occupation.

John Bercow: Will the hon. Gentleman give way?

Christopher Leslie: If I may make a little progress, it would help.
	The Electoral Commission has always said that it was up to the Government how many regions they wanted to pilot. In the statement issued by the commission on Report in the other place, it said that
	"it was open to Government to have further discussions . . . if they were minded to designate additional pilots".
	The House will be aware that there is a disagreement between the Electoral Commission and the Government over the definition of a pilot and whether a pilot can extend to four regions. It is important to examine the issue, as it quickly becomes clear that there are no substantive grounds for opposing four pilot regions.
	The scale of piloting that we propose is not too great or excessive. The four regions represent 31.6 per cent. of the UK electorate. I do not agree with those who say that that is too large-scale. The UK is made up of 12 electoral parts, of which we are choosing to pilot in four. That is a minority of the country and cannot therefore be caricatured as national roll-out. Nevertheless, it is a significant pilot, and rightly so—it needs to be, because this is the next stage after the local government pilots in the process of piloting.
	If we pilot in only two regions, that would not be scaling up. Previous pilots, which included all-postal voting as well as e-voting, have been going through a process of scaling up for a number of years. Pilots in 2002 were available to about 2.5 million electors. Experiments were scaled up in 2003 to make them available to an electorate of about 6.5 million. Were we to exclude Yorkshire and the north-west, as the other place suggests, pilots this year would be available to only just over 5 million electors—a smaller number than before. If we are to learn lessons about the scalability of all-postal voting, we must test on an appropriately large sample. Larger- scale pilots are a means of testing the co-ordination and interoperability of suppliers and proving the capacity needed to support wide-scale all-postal voting. Only through this proper, reasoned, step-by-step process will we be able to gain the experience that will inform future policy.
	In any case, postal voting on demand is scaling up. The introduction of postal voting on demand in 2000 vastly increased the popularity of postal voting. More than 1.7 million postal votes were issued at the 2001 general election—an increase of roughly 87 per cent. on 1997. Some constituencies showed even more striking increases. Were such an increase to continue, we could almost see a de facto rolling out of all-postal voting in some elections. Clearly, the sort of testing of the postal services and other suppliers in a structured and ordered way that these pilots will allow is vital if that is to be achieved safely.
	Piloting in four regions is no more risky than piloting in three or two regions. It is a curious argument advanced by some that because all-postal voting is being piloted, it must necessarily be limited in scope to a couple of regions. Pilots should be held only where, after careful assessment, it is the judgment of those who are responsible on the ground that the election can be successfully delivered. Where that judgment is made and where resources are available, we should be able to pilot. To the extent that regional circumstances would allow the delivery of successful pilots, we should have as many pilots as our resources permit. In this way, we achieve the greatest benefit for voters now, for democratic engagement now, and for democracy in the longer term through the pilot outputs of lessons learned and confidence built.
	The Electoral Commission has not identified to us what the risks of scaling up from two or three to four regions would be. If, as the commission accepts, each region individually can deliver a successful pilot, there is no reason to think that each will not be successful if all four regions are chosen.

John Pugh: Can the Minister explain slowly for the benefit of the House—we must be a bit dull—what he expects to learn from four regions that he will not learn from two?

George Foulkes: Twice as much!

Christopher Leslie: In many ways, there is virtue in recognising that the increased scale will enable us to learn more from the different parts of the country. I know that the hon. Member for Southport is concerned about complexity and would shy away from piloting in the north-west. It is important to deal with some of those challenges and recognise that if the Electoral Commission itself recommends that in future all local elections should be on an all-postal basis, we must test postal voting in areas that present complexity.

John Bercow: Increased scale underlines the importance of protection against fraud, just as it would in relation to voting in person. Can the Minister tell the House what is the mechanism to prevent someone from voting by post in two areas?

Christopher Leslie: The same arrangement applies as in conventional elections. The electoral registration process is the bedrock upon which a ballot paper is issued in a conventional election or in a postal election. If people are registered incorrectly or improperly, that is clearly a matter for the regulations that relate to registration, not for the all-postal piloting arrangements.
	Hon. Members will be aware that in three of the four regions that we have selected, there will also be referendums on regional assemblies on an all-postal basis in October—a decision welcomed by the Electoral Commission. This is a relevant factor that should be borne in mind and which it would be odd to ignore. It cannot be thought helpful for major polls to be held four months apart on a differing basis. That would not benefit the electorate or the election administrators.
	I shall close with two further quotes from regional returning officers. In my letter I asked each of the RROs whether they had any concerns that they wished to raise. Paul Rogerson from Yorkshire writes:
	"Unsurprisingly, the earnest wish of all of my Local Returning Officer colleagues across the region is that there should be certainty about the basis upon which the June elections are to be conducted, as soon as ever possible."
	Sir Howard Bernstein from the north-west writes:
	"I realise that due process within both Houses must be undertaken to formalise the pilot, but I know I speak on behalf of all my colleagues when I express the hope that these are concluded as quickly as possible so that we can plan with certainty, and in so doing, feel even more confident in delivering."
	I urge hon. Members to listen to these concerns and to recognise that we have painstakingly sought to allay worries wherever genuine concerns have emerged. I hope the House will allow pilots to take place in all four regions that are now willing and prepared.
	Parliament needs to settle the matter. If the Government are now decided on the issue and the Commons makes up its mind, we must be able to get on with planning and preparations. It is important for this elected House of Commons to take a view—a final view, I hope—on which regions should have electoral all-postal voting pilots. Hon. Members of this House are best placed to make decisions on elections policy. Although we must listen to the views of the other place as a revising Chamber, we must also weigh up the fact that we are accountable for Parliament's decisions and they are not. The House of Commons needs to make clear its views on improving our democracy and electoral systems. I commend the Government amendment to the House.

Nick Hawkins: Having listened to the Minister for 40 minutes on the first group of amendments, all I can say is how wise we were to vote against the programme motion. I know that he was generous in taking interventions, but the time that we are left with will be wholly inadequate to discuss these important matters.
	We are defending what another place rightly decided to do. On this day, on which constitutional matters, the role of the second Chamber and the Government's threats to indulge in yet more constitutional vandalism are much in the public eye, it is well worth noting that another place defeated the Government on two key parts of the Bill by very substantial majorities. Those were not merely narrow defeats by one or two votes. On the first issue dealt with in this group of amendments, the Government lost in the other place by 169 votes to 111, and on the next, by 157 votes to 110.
	Why was that so? Why did so many peers—Conservatives, Liberal Democrats and a substantial number of Cross Benchers—feel that the Government had got it so wrong, and why will the veiled threats in the Minister's last few sentences fail to work when the matter returns to another place? Part of the reason, at least, is that the Government have so clearly ignored the firm views of their own Electoral Commission—a body intended to advise on these matters, which the Government created but choose to ignore. The Electoral Commission clearly recommended that there should be just two regions for all-postal pilots, but the Government seek to impose four regions against their own commission's advice.
	Another part of the reason is that the Minister's repeated statements to the House have been contradicted by the Government within just a fraction over four weeks. Let me refer to what he said not once, but on a number of occasions, as recently as 16 December, when the Bill was before the House:
	"We remain keen, however, to proceed with all-postal voting in three regions."
	He also said, using a phrase of which we have made much mockery:
	"In scaling up towards a multi-channel general election"—
	he indulged in an equal neologism this afternoon in talking about scalability, whatever that is—
	"after 2006, we believe that pressing ahead with a wider range and variation of piloting provides the best opportunity to learn lessons and to develop capabilities in new electoral techniques . . . The Government will consider in more detail each of the potential candidates with a view to announcing the location of the third all-postal pilot in the coming weeks."
	As recently as 16 December—the last time this legislation was before the House—there was no mention of four areas. He continued:
	"we can conclude which third all-postal voting pilot will proceed."
	Apparently, he hoped to come to a conclusion soon on
	"which region or nation should be the third choice".
	Clearly, he was trying to hold out hopes to all his hon. Friends, who gave him such a hard time and so much friendly fire in pleading the cause of Scotland. He told us:
	"I intend to make a decision relatively quickly on which third region or nation we wish to select."—[Official Report, 16 December 2003; Vol. 415, c. 1511–1514.]
	Later, he said that the Electoral Commission had recommended that there should be three all-postal pilots. Of course, it did not make such a recommendation; the Minister himself made a mistake. The commission was asked to recommend three regions, including one for an electronic pilot, and it recommended only two, for very good reasons.
	Thus, as recently as 16 December, the Minister said not once, twice or three times, but about six times over five columns of Hansard that there would be three regions—the two that the Electoral Commission had recommended and a third that the Government would impose. Suddenly, though, it all changed. Who knows whether it did so for party political reasons? In a written statement on 21 January, he slipped out this announcement:
	"I can today announce . . . that two further regions will also hold all-postal pilots. These regions will be Yorkshire and the Humber and the north-west."— [Official Report, 21 January 2004; Vol. 416, c. 64WS.]
	It was announced that, effectively, a swathe of the country—half of England—would be involved. That is hardly a pilot.
	What caused the Government to ignore what the Electoral Commission had said about the proposed all-postal pilots for Yorkshire and the Humber and the north-west, and what was the reaction of the Government's own Electoral Commission to that snub? We must now turn to what will undoubtedly become known as the Younger letter—a letter that has already been referred to in several interventions and that was drawn to the attention of the House earlier by my hon. Friends the Members for Runnymede and Weybridge (Mr. Hammond) and for Gosport (Mr. Viggers), who answers questions on behalf of the Electoral Commission.

George Foulkes: Will the hon. Gentleman give way?

Nick Hawkins: I shall give way to the right hon. Gentleman, but only after I have referred to the Younger letter.
	In an astonishingly strongly worded letter to the Minister, sent as recently as last Thursday, the chairman of the Electoral Commission says, among other things:
	"We felt unable to make a positive recommendation in respect of those regions",
	meaning Yorkshire and the Humber, the north-west and the west midlands. That was the quote that we eventually extracted from the Minister when he was trying to indulge in selective quotation. Sam Younger goes on to state:
	"The guidance we were given by Government indicated that you wanted to run with three pilot regions and this view was re-inforced by the statement issued in response to our report which accepted the two regions we regarded as most suitable, but added that you would look for a third from those who were potentially suitable."

George Foulkes: Will the hon. Gentleman give way?

Nick Hawkins: I shall do so when I have finished referring to the Younger letter, as I have already said.
	The chairman of the Electoral Commission also states:
	"We always recognised that it was open to Government to have discussions with those regions falling into the 'potential' category to see whether the reasons we had identified for not making a positive recommendation could be satisfactorily resolved. We understand those discussions took place, although the Commission was not involved in them."
	The Opposition are very concerned to hear that the commission was not involved in those discussions, and we are suspicious about their nature and extent. That is why I have asked the Minister—he noticeably failed to answer me—to place in the Library the full minutes of all meetings that took place involving him, the Deputy Prime Minister or any other Ministers. We believe that it is implicit in what Mr. Younger is saying that the Government have leaned on returning officers.

George Foulkes: Will the hon. Gentleman give way?

Nick Hawkins: I shall give way to the right hon. Gentleman in a moment: I have not forgotten him.
	Sam Younger's next passage is the most significant of all:
	"However, it does not follow that the Commission would be unconcerned about the number of pilot regions. As I have mentioned, we expected the Government to nominate three regions and were surprised to learn that the Bill was to be amended to name four regions.
	You are aware of our view"—
	the view of the Government's own Electoral Commission—
	"that the rollout of all postal elections needs to be underpinned by a more robust statutory framework. We have recognised at the same time that pilots provide the means by which we can test and learn from new ways of voting and that of necessity they have to be conducted without the full range of new measures we would wish to see, in particular individual registration"—
	an issue to which we will certainly return this afternoon. Mr. Younger continues:
	"To date piloting has been on a limited scale, but you are aware of our view that so far as all-postal elections are concerned, most of the lessons have been learned. Nonetheless, we welcome their use on a regional basis in order to test issues of scalability"—
	the Minister's word. Mr. Younger also says:
	"But in our view pilots that cover over a third of the English electorate in June go further than we think necessary in order to address those issues".
	The Government's own Electoral Commission, through its chairman writing to the Minister, has said that holding pilots in June covering more than a third of the English electorate goes further than it thinks necessary. The letter is very strongly worded, and it goes on to say:
	"especially in the absence of the underlying legislative change we consider necessary. There is also in our view increased risk, with combined elections and in some cases new boundaries, in running on such a large scale and we are not persuaded that the risk is outweighed by what we might learn from four regional pilots as opposed to two."

Lindsay Hoyle: Will the hon. Gentleman give way?

Nick Hawkins: I shall do so only after I have given way to the right hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) in a moment.
	The letter concludes:
	"It is of course for Parliament to decide the number of all postal regions. But we urge that this matter is resolved as quickly as possible."
	The matter could be resolved very quickly if the Government returned to what the Electoral Commission itself recommended—just two electoral regions, which is what the other place voted for, as I believe it will do again.

George Foulkes: I despair of this pettifogging nit-picking from the Opposition. Why does the hon. Gentleman accept the views of an unelected Chamber rather than those of an elected one? Why does he not want to make it easier for people to vote? Why does he not move into the 20th century, let alone the 21st? Is he aware that in the next general election in India, almost 700 million people will vote electronically? When will we catch up with that?

Nick Hawkins: We debated extensively in Committee the rejection by the Government's own Electoral Commission of their proposal to have electronic voting. I do not think that I would be in order if I went back over the ground that was covered in Committee in that regard, as it is not relevant to the amendments. We believe that the Government are behaving quite wrongly in overruling the clear and strongly expressed view of the Electoral Commission that they set up.

John Gummer: I invite my hon. Friend not to listen to the right hon. Gentleman who interrupted him and who misses the point entirely. It is not that we do not want more people to vote—

George Foulkes: Yes it is.

John Gummer: The right hon. Gentleman may keep his own ideas, silly though they are, and leave me to express mine.
	My hon. Friend may accept that we are concerned that we should constitute these changes in a proper way that deals with the dangers and is serious in its intent. If the Government want to have an independent Electoral Commission, would not it be better to take its advice rather than overruling it behind closed doors or listening to the silly views of the right hon. Member for the three Scottish places?

Nick Hawkins: I entirely agree with my right hon. Friend.
	Let us consider the detail of what the Electoral Commission said about the first of the extra two regions that the Government propose to add, Yorkshire and the Humber. At paragraph 2.117 of its December report, it said—[Interruption.]

Mr. Deputy Speaker: Order. The right hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) appears to be developing a career as a sedentary sketch writer. For the sake of good order, I ought to persuade him to desist.

Nick Hawkins: I am grateful, Mr. Deputy Speaker.
	The Electoral Commission said:
	"Returning officers would strongly prefer not to be involved in any all-postal pilot."
	That is repeated and stressed again at paragraph 3.9, which says:
	"The Commission notes the distinct preference among returning officers and their staff to run the elections on conventional lines."
	That is why the Electoral Commission ruled against Yorkshire and the Humber being suitable, and why the Government should take its advice on the matter.

Lindsay Hoyle: The hon. Gentleman rightly sets out what the Electoral Commission says, but will he not give any weight to what the chief executives of all the local authorities in the north-west said? Unanimously apart from two, they consider that it would be beneficial to the region to have a postal vote pilot scheme there and ensure a franchise for those who wish to vote by that method.

Nick Hawkins: I was referring to what the Electoral Commission said about Yorkshire and the Humber, but as the hon. Gentleman has introduced the subject of the north-west, let me remind him of what it said about that region. Its concerns are different from those that it expressed about Yorkshire and the Humber. In saying that it could not make a positive recommendation in relation to the north-west, it said, at paragraph 3.10:
	"Firstly, we are concerned that the support for a pilot scheme does not extend across the whole of the region, given the high number of local elections scheduled for 2004."
	A much bigger concern was raised in relation to fraud. Paragraph 2.84 of the December report says:
	"There have been several allegations of electoral fraud in the North West in recent years. These have centred around interference with postal votes or intimidatory procurement of proxy votes in conventional elections. Some of these investigations could proceed to court in early 2004. This will be likely to produce unfavourable publicity about the security of postal voting."
	That reinforces the concerns raised by a truly independent body, the Electoral Reform Society, which said:
	"The Society also notes the removal of some of the safeguards first introduced by the 1872 ballot secrecy legislation with regard to undue influence and bribery. Whilst these risks have always existed with postal votes, until now they could only affect a small minority of votes. Corrupt practices on a grand scale have become feasible again for the first time in 130 years. Of course, this is not a guarantee that any such events will occur, but the risk is increased."

Christopher Leslie: Nonsense.

Nick Hawkins: The Minister should take more notice not only of what the Electoral Reform Society said in its briefing to all hon. Members but of what Lord Greaves said—he is a man not of my own party, but one who spoke splendidly and in great detail in another place about exactly what had been going wrong in the north-west in his personal experience. He prefaced his remarks by saying that he was not being partisan, because in two cases at least, in Hackney and Havant, councillors of his own party had been convicted.
	Responding to what a Minister had said in the other place, Lord Greaves said:
	"I have to say that his basic thinking in relation to the North West and, indeed, in relation to Yorkshire, is wrong."
	He went on to talk about some of the corruption that had taken place in areas such as Bradford, and quoted the hon. Member for Bradford, North (Mr. Rooney). He said:
	"Mr. Rooney said he believed abuses of the system meant it was impossible to say that the poll was free and fair."—[Official Report, House of Lords, 26 January 2004; Vol. 657, c. GC13–15.]
	He talked about how things had gone wrong in Blackpool, Oldham, parts of Manchester, Ashton-under-Lyne, Bury, Rochdale, Blackburn, Burnley, Pendle and certain other places.

Andrew Bennett: Will the hon. Gentleman give way?

Nick Hawkins: Lord Greaves said that many elections in the region would be rigged.
	On the second day of Grand Committee in the other place, Lord Greaves went into a great deal of detail about what had happened in Pendle. He talked about what went wrong in terms of the delivery of postal votes to the home of a Labour candidate's cousin in a different town: 61 postal votes were sent to two addresses in Rochdale. He said that there had been television documentaries and articles in The Guardian about postal vote fiddles in various areas, including East Lancashire. "Channel 4 News" had interviewed a voter whose vote had been stolen, as well as a young Asian man whose voting papers had been delivered along with 44 other postal votes to 126 Chapel street, which it claimed was the home of a Labour candidate's brother-in-law. That year, a lot of complaints were made at polling stations, and Pendle borough council's returning officer made a report.

Andrew Bennett: Will the hon. Gentleman give way?

Nick Hawkins: In the case of one family living at Fir street in Nelson, none of whom had applied for a postal vote, six votes were sent to 77 Barkerhouse road. Lord Greaves set all that out in tremendous detail in another place, describing precisely the dangers of electoral fraud that the Electoral Commission referred to in its report as the main reason why it felt that the north-west was unsuitable. We agree with Lord Greaves in thinking that there are very good reasons why Yorkshire and the Humber and the north-west are completely unsuitable for postal pilots.

Andrew Bennett: Will the hon. Gentleman give way?

Nick Hawkins: We believe that this House should support another place in returning to the original two regions, and only those two.

Andrew Bennett: The hon. Gentleman might have considered giving way, because he might have been able to tell us which of those examples of fraud took place where there were pilots for the proposals, and which took place under the existing system. I would suspect that 90 per cent. of the examples that he gave took place under the present system.
	I should make it absolutely clear to the House that I am speaking now because it is very important that my constituents be able to vote in this summer's elections by post. I have been encouraging people in my area to register for postal votes under the current system, and it has been very hard work. The hon. Member for Reigate (Mr. Blunt) complained about one of the ways in which I have been doing so, and I should make it clear that if I have thereby breached any of the rules of the House, I unreservedly apologise. But I make no apology for wanting my constituents to be able to vote by post, because I firmly believe that it is essential in a democracy that we achieve a high turnout.
	I was obviously very pleased with the result of the last general election, but I was horrified to find that less than half the people in Denton and Reddish had voted. That problem affects not just local and European elections, but elections such as general elections, and in many ways the issue is the way in which the campaigning is conducted. I want briefly to illustrate the point by explaining what happened to me on the Tuesday before the Thursday's general election poll. I went to an area that was probably fairly strong for the Labour party, accompanied by a significant number of canvassers. We walked down the streets, and for me, as a candidate, it was brilliant. People came out of their houses and they wanted to shake my hand, and they wanted posters and autographs. We felt great.
	That was a marvellous experience, but when I went back down the same streets on polling night with a loudspeaker, no one emerged from their front doors and there was no sign of anyone going to the polling station. On reaching the count, it was very obvious that we had put up more posters in those streets than we had gained votes. So far as the people of that part of my constituency were concerned, there was no contest. They had listened to the media and they knew what was going to happen nationally. They had received no literature from the other political parties, and they felt no excitement and no pressure to vote. One can well understand why it was easier for them to stop at home—easier, for example, not to put their small children into the pram and take them to the polling station. It was better to stay in, have tea and watch the television than to turn out, because they assumed that the election was a walkover, which, in effect, it was. That is one of the problems: in terms of local electioneering, less and less is happening in many parts of the country. People do not get the feeling that the election is close and that their vote will make the difference.
	If we move to a postal voting system, many people will be able to vote at a time that suits them. They will not have to worry about the baby that is crying or the meal that must be prepared, so there are very strong reasons why we should move to such a system.

John Pugh: The hon. Gentleman seems to be saying that what gets people voting is a close contest, but how will voting by post make it any closer?

Andrew Bennett: If people are affected by a measure of inconvenience, they have to weigh up the importance of their vote and consider whether it will make a difference. If we make it easy for them to vote—as postal voting would—the question of the pressures caused by other activities does not arise. It should be easy for people to cast their postal vote at some point in the week or so in which they would be allowed to do so, whereas having to visit a polling station can cause more of a problem.
	I want to make it clear that I recognise that the possibility exists of malpractice in postal voting. Indeed, the argument in favour of the pilots is to make sure that such a system is as reliable as the polling station system. But let us be clear: there has been some fraud at polling stations, and in some parts of the United Kingdom it still goes on. We need to ensure that we develop a postal voting system that is as fair as the current one.

David Heath: The hon. Gentleman is the distinguished Chairman of a Committee of the House—a Committee that has produced written evidence that should be read by every Member taking part in this debate. I do not want him to pre-empt the views of his Committee, but does the evidence it has received lead him to the view that there are serious electoral fraud issues that need to be addressed as part of the pilot process?

Andrew Bennett: Yes, and I was about to come to that point. I want my constituents to be able to vote by post, but I do not want the system to fall into disrepute as a result of the introduction of fraud.
	I have seen no evidence to suggest that more fraud has occurred in the pilots conducted so far than is already possible under the postal voting system. We have published the evidence to which the hon. Member for Somerton and Frome (Mr. Heath) and my hon. Friend the Minister referred, and we will take oral evidence tomorrow morning. I want to encourage anybody who has a view on the possibility of fraud to let us have such evidence. However, we should be able to design a postal voting system that is at least as good as the current system, and hopefully we can design one that is better. Disabled groups have advanced arguments about the problem of disfranchisement. I have always accepted that problems arise with postal votes in old people's homes, because it is difficult to ascertain whether the vote is being cast by the old person in question, or by someone who is assisting them. But that problem is not confined to the new proposal; it already exists.
	My plea to this House and to the House of Lords is to let us have some more pilots, and to let us learn from that experience. I hope that I can present to the House a Select Committee report that makes recommendations on some of the things that need to be done to ensure that we have a secure and fair voting system.

David Heath: I excuse the hon. Member for Denton and Reddish (Andrew Bennett) from what I am about to say because he has made a very important contribution to the debate, but I should say that I find this debate and the circumstances in which we are holding it profoundly depressing. The more I listened to the Minister, the more I felt that a measure of shabby expediency was being dressed up in matters of high electoral principle. I am afraid that that simply will not wash.
	Setting aside for the moment the Minister's overruling the independent advice of the Electoral Commission—I shall return to that because it is absolutely crucial to our deliberations—I find particularly offensive the continuing misrepresentation of the commission's views by Ministers in this House, either directly or by partial quotation. During Question Time earlier today, I drew that point to the attention of the hon. Member for Gosport (Mr. Viggers), who answered questions on behalf of the Speaker's Committee on the Electoral Commission. I also drew attention to the comments of the Leader of the House, who said that the Electoral Commission
	"has said that we should go ahead with two schemes and, if we judge that there are sufficient resources and so on to enable four pilots to be held, that we should go ahead and hold those as well. That is exactly what it said."—[Official Report, 4 March 2004; Vol. 418, c. 1066.]
	That is exactly what the Electoral Commission did not say. It said anything but that it wanted to go ahead in the other regions. It said that there were significant problems with doing so, and that it could not make a positive recommendation, as has repeatedly been pointed out.
	There has been a process of partial quotation of the letter from Mr. Younger, the chairman of the Electoral Commission, to the Under-Secretary, most of which has been read out today. However, it is worth drawing attention to its opening sentence, which states:
	"When we met earlier this week with you and other ministers, concern was expressed that the Commission's position on the pilot regions was being misinterpreted".

Christopher Leslie: By you.

David Heath: That is not what the letter suggests. It suggests that we know only too well what the Electoral Commission was saying, and that the commission is seriously put out by the fact that Ministers insist on saying that it included in its recommendations matters that it clearly did not.

Christopher Leslie: rose—

David Heath: I shall give way to the Minister, so that he can apologise for that omission.

Christopher Leslie: I have already said clearly that we have a disagreement with the Electoral Commission about the definition and scale of a pilot, and that the commission made a positive recommendation for two regions. My point was that there was a middle category of recommendations, with some regions that the commission said were potentially suitable, but that that was being misrepresented to suggest that it had said no to Yorkshire and the north-west, which is not the case.

David Heath: I hope that hon. Members who intend to take part in the Division later will go to the Library and read the letter from the Electoral Commission, because it is incapable of the interpretation that the Minister is putting on it. The hon. Member for Surrey Heath (Mr. Hawkins) has already pointed out the declaratory statement in the letter, which cannot be interpreted as the Minister has interpreted it. In the view of the Electoral Commission,
	"pilots that cover over a third of the English electorate in June go further than we think necessary in order to address those issues, especially in the absence of the underlying legislative change we consider necessary."

Nicholas Winterton: May I ask the hon. Gentleman, who is making an excellent speech and referring to the letter accurately and truthfully, what the legislative programme is that needs to be in place before a new system of all-postal voting could be more appropriate? To my mind that is a critical factor. Are there sufficient safeguards, some of which may need to be implemented by legislation, to ensure that an all-postal voting system will be fair, and will not be subject to massive fraud?

David Heath: I am grateful to the hon. Gentleman for those comments. I shall not go into the totality of the Electoral Commission's proposals to reduce fraud, but it drew attention to a number of ways in which electoral law needs to be improved to satisfy the requirements for a fair election.
	I entirely accept that, as the hon. Member for Denton and Reddish said, those strictures apply equally to postal votes under the current arrangements. However, the problem with all-postal ballots is that they multiply by a considerable factor the capacity for fraud to have a significant impact on the electoral outcome. Perhaps that is not the case with European parliamentary elections, because of the extraordinary mechanism that we have for them, but the European elections in June will be combined with those for many local authorities, and the capacity for the outcome of local authority elections to be distorted on that basis is considerable. Hon. Members should be aware of that danger.
	The Government's position has changed almost continually. When the idea was originally proposed, they simply wanted, for obvious administrative reasons, to bring together the date of the local government elections and that of the European parliamentary elections, so as to maximise the turnout for both. That seems an entirely laudable aim, and that was the limit of their expectations. Then we heard the suggestion about the three pilots. It was repeated again and again that the Government were looking for three pilots; indeed, that was the advice that they gave the Electoral Commission.
	I understand that there may have been some disappointment in the Office of the Deputy Prime Minister when the Electoral Commission said that there were only two, rather than three, regions that it could positively recommend. On Report, the Minister said that he thought that the Government would consider a third region with a view to bringing it into the net. I do not think that anybody who contributed to that debate or listened to it thought that that meant anything other than that the runner-up would be considered.
	As we know, the Electoral Commission judged that the next most suitable region was Scotland. Scottish Members argued strongly that Scotland should be included. Instead, however, the extraordinary and shabby outcome is that the northern English regions will be included, with no apparent logic, ahead of Scotland. I strongly suspect the involvement of the Deputy Prime Minister here. I suspect that he has insisted that, for what purpose I do not know, he will have an all-postal ballot in his part of the country—Yorkshire and the Humber. That is probably the single determining factor.
	In taking that view, the Government have set aside their own original criteria. The Minister said that he disregarded complexity, and did not believe that it was an issue that needed to override other considerations. Indeed, he thought that there was a positive benefit to including a complex region. If so, why on earth did the original criteria given to the Electoral Commission expressly say that regions that were over-complex should be omitted, because so many local authority elections were happening on that day? If those are the criteria that the Electoral Commission was asked to consider—they were the Government's idea, not its own—why are the Government now taking a different view?
	I understand that some Members are keen to have all-postal ballots in their areas. We all want innovation that really increases voter turnout, but we have to ask ourselves: when is a pilot not a pilot? The answer is: when the pilot includes almost half of England, and almost half the local authorities that will hold elections on that day. Those with an historical bent might recognise that the whole of the Danelaw will have all-postal ballots but that no part of Wessex or Anglia will have that benefit.
	I do not suppose that ethnic considerations from the middle ages have come into play, but I do wonder why an all-postal ballot is considered appropriate for areas that the Government feel have a higher propensity to vote for the Labour party, but not for areas that tend to vote for the Liberal Democrats or the Conservative party.
	In an earlier intervention it was suggested that postal voting was an important issue for coalfield communities. If the issue is important for retired coal miners in the north, why is it not so for retired coal miners in the Rhondda, or in Kent, or in my constituency? Why are they not to have postal voting? If the logic is that we can extend the pilot to any level, why not include the whole country? Let us have a single electoral system for the whole country.
	That view is not being taken, however. We are to have one law north of the Trent and another south of it. That cannot be an acceptable way to run an election in which the campaigns will be conducted on a national, not a local basis. Those are the considerations that lead me to recommend in the strongest possible terms that my right hon. and hon. Friends hold firm to the position of our noble Friends in another place and resist the Government's blandishments—not because we do not want electoral practice to be reformed, but because the Government are making the changes for their own ends, not for the stated objectives.

Kevin Barron: I took great exception when the hon. Member for Surrey Heath (Mr. Hawkins) said that Yorkshire and the Humber should not have the right to hold an all-postal ballot in June because of the stream of wrongdoing and breaches of electoral law that he read out. I suppose that such things do not happen in places like Surrey or Somerset, or anywhere else. I take exception to that being cited as the reason for opposing the idea.
	If Opposition Members are relying on arguments about fraud and breaking electoral law, it would be more consistent if they argued not that two regions should have the systems proposed for the east midlands and the north-east in June, but that no regions should have them. To my knowledge, that position has not been put in this House or in the other place, and there would be greater consistency if it had been. I find it difficult to accept that that position is being put in the Lords amendment.
	One reason why we have gone from two assemblies to four is that in October this year there will be an all-postal vote for a referendum on whether there will be regional assemblies for the north-west and Yorkshire and Humber. That is why the Government have acted and I support them—that is a sensible way to approach the issue, and I am in favour of it. Many things have been said in this House and the other place about fraud and the breaching of secrecy. Given the arguments that we have heard in the past hour, it would be more consistent to argue for stopping all postal voting, never mind all-postal votes. However, those arguments are wrong.
	The other issue I want to take up is what the Electoral Commission said about Yorkshire and the Humber. Returning officers prefer not to change conventional methods of voting, but that is not peculiar to Yorkshire and the Humber. I have stood in five general elections, and in the first three of them the returning officers in Rotherham borough said that it was impossible to count the votes from the Rother Valley and Wentworth on the Thursday night of the general election. They used to leave us until the next day and just count the votes from Rotherham on the night. I had to run a campaign to get that changed in 1997, but the returning officers said that it could not be done. In the public sector—and, indeed, the private sector—if people are asked to change how they work and interact with one another, the first thing that they always say is, "We cannot do that. It cannot be done." I understand that the returning officers in Yorkshire and the Humber have changed, and that pleases me. There is no reason why we should not pass legislation to improve turnout at elections, and at local government elections in particular.

John Redwood: The right hon. Gentleman should know that some Conservative Members think that postal voting will increase turnout, and if all things were equal we would recommend it. However, such a widespread experiment cannot proceed until the real issues of impersonation, pressure and fraud are dealt with. That is our case tonight; we are not against postal voting in principle.

Kevin Barron: The Electoral Commission published a report in July last year called "The shape of elections to come", which covers the local government election pilots that took place last May. It states that fraud is no more likely in an all-postal vote than it is under the current system where people go to the polling station. I do not have the report with me; it is in my constituency office.
	The hon. Member for Surrey Heath shakes his head, but I read that report and I shall tell him why I read it. Last May, Rotherham metropolitan borough council had an all-postal vote for local government elections for the first time in the 25 years that I have been involved in politics. The all-postal vote was the best thing that has ever happened to local elections because it improved the turnout to more than 50 per cent. In one of my wards, turnout was just over 20 per cent. in 2000; under the all-postal vote, it more than doubled to over 53 per cent.
	After the publication of "The shape of elections to come" and before a decision was taken on whether there should be all-postal votes for the local government and European elections this year, I wrote to the Electoral Commission to say that it would be completely consistent for it to extend its pilot scheme in Rotherham last May to this year's local government elections. I said that for numerous reasons, but one of them was that the Electoral Commission itself was saying that the future of local government elections is likely to be all-postal ballots. Indeed, the executive summary of "The shape of elections to come" states:
	"Our evaluation of the all-postal pilot schemes suggests that this approach is effective in boosting participation rates at local elections—to an extent that was largely underestimated when the pilots process first began, and which appears to be sustainable."
	If hon. Members do not support the amendment in lieu, turnout in my constituency will be knocked back and it will be a retrograde step for this year's local government elections. It makes sense to use all-postal voting in June and in the referendum vote later in the year. I do not say that for party political reasons but to get people actively to participate in local government elections. All hon. Members know that there have been by-elections in some parts of the country where turnout has hardly reached double figures, and we have seen reduced turnouts in local government elections year upon year. If we do not start to get serious about increasing participation, people will not bother to vote.
	I have read all the arguments put in the other place on 23 February, and most, if not all, of them are party political. Two councils were mentioned in the other place and they are both against all-postal votes: Liverpool council in the north-west, which is Liberal; and Bradford council in Yorkshire and Humber, which is Tory.
	I believe that Lord Rennard is a Liberal Democrat—I looked him up in "Dod's"—and he gave three reasons why we should not get involved in all-postal votes. He said,
	"First, concerns about lack of secrecy and privacy in voting, which some people believe undermine the basic principles of the Secret Ballot Act of 1872. Secondly, there are considerable concerns about potential fraud with all-postal voting, particularly in relation to homes in multi-occupation . . . There are also concerns about the timing of all-postal voting mechanisms. We now understand that in these all-postal voting pilots in June, the ballot papers will be delivered between 25 and 29 May".—[Official Report, House of Lords, 23 February 2004; Vol. 658, c. 15.]
	Ballot papers are, of course, delivered between 25 and 29 May, and anybody can work that out. Some of the Opposition parties in my constituency did not work it out in May last year. We were leafleting at the end of April, but they were not—they did not realise that votes come early in a postal vote system. Under the current system where there is no all-postal voting, ballot papers still fall on people's carpets a bit before the election, and it is up to political parties to organise their leafleting.
	Lord Rennard went on to say that notwithstanding those reservations it is right to have all-postal votes in two regions but not in four. If he believes that all-postal votes undermine the Ballot Act 1872, lack secrecy and privacy and raise concerns about potential fraud, why does he believe that they should happen in two regions only and not in four?

John Pugh: The Electoral Commission did not mention fraud as a serious consideration in the two areas that it proposed, whereas it mentioned fraud in the north-west.

Kevin Barron: In "The shape of elections to come", the Electoral Commission states that all-postal votes are no different from the current system. One cannot argue that all-postal votes should not happen in the north-west or Yorkshire and the Humber because of the potential for fraud. That is an argument not to have all-postal ballots at all.
	I mention the north-west and Yorkshire and the Humber because of the referendum that will happen later this year. The Bill will introduce an all-postal ballot, which makes sense. I do not know why the Electoral Commission does not see that. Its document about all-postal voting, published in July, states:
	"Indeed, there are real risks that if Returning Officers in areas with repeated experience of all-postal elections are obliged to revert to use of polling stations alone, voters will express considerable frustration and disappointment."
	The point is that we cannot keep chopping and changing. Rotherham has had one all-postal vote that doubled the turnout in local government elections. Going back to using polling stations in June—I know that the elections are also European elections—could decrease participation by half. It would be nonsense then to change back in October.
	Conservative Members know that they are playing party politics, and that is also what is being played in the other place. I hope that they lose, because they are wrong to use the issue for party political reasons. This is about more active participation in elections and nobody who is elected to this House should vote to discourage that.
	As for those non-elected people in the other place, I shall not express what I feel about them, except to say that they are playing the issue for party politics. The debate on 23 February showed that from the Liberal Democrats and the Conservatives alike. It is a shame, because it will set back participation greatly if amendment (a) is not accepted or if it is rejected again in the other place. However, that would confirm my belief that I was right to vote for the amendment a year ago to abolish the other place. If the Lords reject the amendment, people in my constituency will probably agree that they should be abolished, because that would remove people's rights to vote and lessen their participation. I hope that hon. Members will support the amendment and that the four pilots will mean that local government elections in all constituencies will all be all-postal votes in years to come. That is what the Electoral Commission expects.

Patrick Cormack: I sincerely hope that all-postal votes will not become the norm. It is certainly a novel concept that only the Labour party is approaching the issue from a non-partisan point of view—pull the other one!
	The Minister was allowed to range widely on the issue, and I trust that you, Mr. Deputy Speaker, will allow me to do so also. On the specific issue of the Electoral Commission, it is a great pity that the Minister has reacted as he has. It is a good thing if those who determine the way in which elections are conducted are kept at arm's length from this place and from politicians of all parties. That is why I have always supported the strictly impartial position of the boundary commissions. Sometimes they have made inconvenient recommendations. One such report was extremely inconvenient for me personally in 1997 because it took away the best part of my former constituency. I was left with a lovely area, which I am delighted to represent, but the area that I lost—it is now represented by the hon. Member for Stafford (Mr. Kidney)—was the best bit, electorally speaking. I make no complaint about that and I did not contest at the inquiry the boundary commission's right to recommend it. However, I slightly regret that the Electoral Commission does not follow more closely the boundary commission model in its responsibilities and its constitutional relationship to the Government. I accept that this House determined otherwise—indeed, with the Government's vast majority, what else could we determine?
	I have known Sam Younger for a long time, and long before he became the chairman of the Electoral Commission. Indeed, his late father, Kenneth Younger, was a distinguished Labour Member of Parliament for my home town of Grimsby, and he was one of my early parliamentary idols as well as a rival. I had a very high regard for him. Sam Younger is a man of total impartiality and integrity, and nobody would dispute that. I have met most of his fellow commissioners, and I believe that they are of similar quality and calibre. It is regrettable that when the commission made it plain that it wanted two pilots—

Christopher Leslie: indicated dissent.

Patrick Cormack: Yes, it did. It is pure sophistry and untypically disingenuousness of the Minister to pretend otherwise. The hon. Member for Somerton and Frome (Mr. Heath) and my hon. Friend the Member for Surrey Heath (Mr. Hawkins) have made it plain—and I have talked to Sam Younger about the matter—that the commission was happy to recommend two pilots, but it was not happy with more. It conceded that the Government would want a third pilot, but it certainly did not expect the Government to propose four. Mr. Younger has made his position plain beyond any equivocation in the letter that is now in the Library. The letter has been quoted extensively in the debate, so I shall not quote it again.
	I have talked to Sam Younger about the wider issue involved and I shall put it to the House. The right hon. Member for Rother Valley (Mr. Barron) said that he had fought five general elections, but I have fought 11—nine of them successfully. When I started fighting general elections in 1964 it was difficult to get a postal vote. For some time, the categories of people entitled to a postal vote were very limited. It was a Conservative Government who allowed those who were going on holiday to have postal votes. At the time, there was some opposition from the Labour party because it was thought that Conservatives went on more holidays than Labour people and that it therefore was a party political move. I do not believe that and, indeed, the change was wise.
	Postal votes should be available on request, without having to prove that one travels on business, will be on holiday on polling day or is sick—all the criteria with which we are familiar. I am much less happy with the idea of compulsory postal voting. I would personally prefer compulsory voting. We all want to increase the turnout, and that is the method that is used in some other countries. Making voting compulsory does not mean that one has to cast a vote for a party. An option on the ballot paper could allow voters to say, "A plague on both your houses", or words to that effect. However, everybody would have to vote, either by post or in person.
	If we look back at history, we can see how people struggled to obtain secret ballots and then to extend the franchise. Women in particular struggled to get the vote. The right to vote is precious and it should not be too lightly taken for granted. There is much to be said for making going to the polling station or applying for a postal vote a conscious act. It is not wrong for the House to consider alternatives. We are talking about pilots, although they would cover a third of the United Kingdom and almost half of England. That is a massive amount of people who would have to vote by post. I ask colleagues on both sides of the House to consider what that would mean if it was extended to a general election. I concede that the argument is different for local elections, but if extended to general elections, it will mean the abolition of polling day—[Interruption.] Yes, it will. People have to vote by a certain date—perhaps 9 June, 1 May or whatever—and they have to vote in advance.
	We all know from our experience of fighting elections that, whether it be the result of a Sheffield rally or some other event, opinions can be swayed and people can be persuaded to change their minds. They may either stay at home in greater numbers or even switch their votes. Abolishing polling day—that is effectively what it means—will change the whole way in which elections are conducted. It will change how we all campaign, and in general elections—again I concede that it is different for local elections—it will mean much more voting for the party, or perhaps for the potential Prime Minister, rather than for the individual local Member of Parliament.
	I believe that there is not a single Member—either present tonight or not—who fails to cherish and relish his or her relationship with that part of the United Kingdom that he or she has the good fortune to represent. We all like to conduct our campaigns in our own way, and I am sure that we all like to tell electors that they are not voting for Sir Alec Douglas-Home or Mr. Wilson, "but for me". We take pride in that, but it will be a casualty of any decision to move towards wholly postal elections—it truly will.

Kevin Barron: I agree with the hon. Gentleman about compulsory voting. I remember arguing the same point from the Opposition Benches back in the early 1980s, and there were few takers, when the example was a country such as Australia. He says that postal voting will abolish general election day, but it will not. Depending on the sort of pilot, it is not compulsory postal voting. People in my constituency who wanted to vote in a ballot box for local government elections last year could go along on the day and deliver their vote in the polling station as they had in the past. Not every polling station was open, but the votes were taken to the count and counted in the same way as the others. It made no difference to the final result. It will not result in the abolition of how things were done in the past.

Patrick Cormack: I am sorry, but the right hon. Gentleman and I will have to disagree. If we move towards all-postal elections, that is what will happen. I must tell the House that we should examine our elections on the merits of individual cases. I can concede that there is a case for a postal ballot in local elections. I am much less happy when it comes to European elections, and I am deeply unhappy about the current conduct of such elections where we vote for a party rather than an individual. The old European constituencies were large, but people nevertheless identified with an area and different parts of the country were represented. Now, however, there are many MEPs for the west midlands, but not one has a specific commitment or responsibility to any particular area. I do not like that system at all, and it will be made worse by having compulsory postal ballots in half of England or a third of the UK.
	Every Member present should be thinking about the impact on general elections. The next general election will not be affected, because there will not be enough time. However, if we move down this road—I have already said that it will mean the abolition of a set polling day, because most people will have voted, 10, nine or seven days beforehand—we will change the whole nature of campaigning and of democracy in this country. Before adopting that course, I beg the House to think seriously about the better alternative of compulsory voting.
	I end where I began with the merits of the specific amendment before us. Many disparaging remarks have been made about Members of the other place, but I believe that they bring knowledge and objectivity to the debate—[Interruption.] They certainly do. After all, electoral registration officers, whom the Minister prays in aid, are just as unelected and unrepresentative as Members of the other place. Those Members bring objectivity and knowledge—in some cases based on years of service in this House—to debates, and I believe that that they cast their votes wisely and that this House would be ill advised to reject what they have recommended. I say that for two reasons: first, for the reasons advanced in the other place; and, secondly, because we would be backing the Electoral Commission, which the Government, sadly, are not.

Terry Rooney: There has been much talk about corruption in elections, and the hon. Member for Surrey Heath (Mr. Hawkins) specifically mentioned my city of Bradford. I should like to highlight a few incidents that have taken place under the present system, but we should also acknowledge that corruption in elections is perpetrated by political parties and by people acting on their behalf. If we got to grips with certain types of people in political parties, we would not have these problems.
	One candidate in the 1992 general election—I stress that it was not connected with my campaign—was offering £5 for a polling card. When that was brought to my attention, we encouraged people who were going to vote to retain their polling cards. After they had voted, they delivered their cards to that candidate and collected their £5. It must have cost him about £2,000, but he did not get a single vote out of it. That happened under the present electoral system.
	More recently in Bradford, large gangs of thugs—perhaps 50 or 60 people— have congregated around several polling stations in the inner city area. They have intimidated electors, telling them how to vote and threatening them with physical violence if they do not accept their advice. That is what is happening on the ground under the current system.
	In 2001, the first election for which the new system of postal votes was in place—and bearing in mind that it was not necessary to have a medical or other specified reason to apply for a postal vote—there was a 500 per cent. increase in the number of Bradford electors using postal votes. What were the problems and difficulties experienced in Bradford in 2001, that drew national attention at the time? The problems were mainly connected with registration for postal votes, which does not happen in all-out postal votes where there is no application stage. In 2001, we once again had gangs of thugs going around collecting signed application forms for postal votes, then redirecting where the votes were sent to. One gentleman—I use the terms loosely—was arrested. He had 31 blank ballot papers in his pocket, but the police said that he had not committed any offence. That is happening under the current system.
	In Bradford, four wards out of 30 had problems, and I am talking about the general election and two subsequent local elections. In Yorkshire, nine wards out of 400 experienced difficulties. That is no reason to deny the vast majority of the population the right to an all-out postal vote. Some argue that, the greater the turnout, the more the impact of fraudulent practices is diluted. There is a ceiling to how many people can be conned and corrupted, and a big turnout helps to overcome the problem.
	I have said it to the Minister before, but the police and returning officers must take fraud and corruption more seriously. On numerous occasions over the years, West Yorkshire police have not regarded such incidents as a priority. That is a fault of the system; it is not to do with an all-out postal vote. It is a problem with applying the law, taking action, prosecuting people and, if necessary, sending them to jail.
	As we all know, the root of democracy is the right to vote. The real issue is the absolute sanctity of the secret ballot. People who try to abuse that should spend a long time in custody at Her Majesty's pleasure. Such offences should be a priority for the police and returning officers. If the law needs amending, let us amend it.

Nicholas Winterton: I am pleased to be able to contribute briefly to this very important debate. I congratulate the hon. Member for Bradford, North (Mr. Rooney) on being able to quote useful examples relating to his constituency. The right hon. Member for Rother Valley (Mr. Barron) also did so.
	A great deal of the debate has concentrated on how to increase turnout, whether in referendums, local government elections or at European parliamentary elections. I pose the following question to the House: is achieving an increased vote what we are about? Is an increased vote achieved merely by increased convenience? Does an increased vote mean that there is increased interest in politics and what is going on in the local council, in Westminster, in the United Kingdom or in the European Parliament? I wonder whether an increased vote indicates an increased interest and an increased desire to be involved.
	I disagreed with the hon. Member for Bradford, North when he said that if we move to an all-postal electoral system, the limited amount of current fraud will not be multiplied. In that regard, I associate myself entirely with the comments of the hon. Member for Somerton and Frome (Mr. Heath), who made an excellent speech that reflected what will happen in an all-postal system.
	As somebody who has fought 10 parliamentary elections—one fewer than my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack); I associate myself with the totality of his remarks—I have some understanding of what makes the electorate tick and what encourages them to turn out. I have great admiration for the Minister, who is one of the most able and articulate Ministers in the Government. I do not say that lightly; I have listened to many of his speeches and he has sought to advance his case in an able, constructive and articulate way. However, I happen to have reached a different conclusion from his. I believe that fewer and fewer people have voted in recent elections because they no longer believe that Parliament is relevant.
	Shall I tell the House why? It is because successive Governments—including the current one—have sought to bypass Parliament. Indeed, many Labour Members are concerned about the way in which their Government are trying to diminish the relevance of this place to debate legislation. If this place is deemed irrelevant, people will rightly ask why they should vote for those who stand for election to it. I refer to the Executive of the day and not just the present Labour Government. In some ways, although not quite so blatantly, my party when in power sought to abuse, undermine and bypass this place in order to get on to the statute book the legislation that it required. We have only to look at the way in which Select Committees are appointed—

Madam Deputy Speaker: Order. I wonder whether the hon. Member would now address his remarks to the amendment.

Nicholas Winterton: Indeed; that is why I believe that the other place was right to reduce the number of pilot projects from four to two. I accept that their lordships expected the Government to increase the number proposed by the Electoral Commission from two to three, but they are certainly most unhappy about the increase from two to four—for the reasons that so many hon. Members have given during this debate.
	I hope that you will allow me a little discretion, Madam Deputy Speaker. In addition to the Government's bypassing of this place, which makes people not want to vote because they do not think that the House is relevant, the political parties have played a part. The parties have sought to take away the independence of Members of Parliament in genuinely believing in or opposing an issue and in seeking to represent the best interests of their constituency or constituents. Given that the Executive of the day bypass the House and that the political parties seek to dominate and use their members merely as cannon fodder, why should people vote?
	Therefore, I disagree with some of the views of the hon. Member for Bradford, North, as I did with those expressed by the right hon. Member for Birkenhead (Mr. Field), for whom I have the highest regard. Let us consider why people are not voting instead of trying to make it more convenient for them to vote, especially given that an increase in voting is not an indication of more interest in politics and in what is going on in this place, in local councils and in the European Parliament.
	Like my hon. Friend the Member for South Staffordshire, I am concerned that the Government have sought modestly to misrepresent the views expressed by the chairman of the Electoral Commission, Sam Younger, who is clearly not happy that a third of the United Kingdom should be involved in a pilot scheme. Almost half of England is to be involved. That can hardly be described as a pilot project.
	I am not sure whether the Minister is winding up the debate, but I hope that he is and that he will respond to my intervention on what positive steps are being taken to ensure that there are adequate safeguards not only to minimise any abuse of the postal voting process, but to guarantee the integrity of the electoral register. In doing so, we must bear it in mind that the incidence of abuse could dramatically increase in an all-postal election and that there could therefore be major distortion of the results in some parts of the country.
	Many people are concerned that it is now very easy to get a name on an electoral register for an address. No such person lives at that address, but they have been registered by the individual who completes the form each year. Surely we want honest, fair and transparent elections. We do not want just to try to make it more convenient for people to vote. What thought has the Minister given to the valid points made by my hon. Friend the Member for South Staffordshire about the impact of the new system on campaigning? As there will be a period between when postal votes have to be sent back and the actual polling day, at what stage will it no longer be worth while for a candidate to continue campaigning? I am deeply worried that our unique system—the relationship between a Member of Parliament and his constituents—will be broken—

Madam Deputy Speaker: Order. I must interrupt the hon. Gentleman again. We are looking at a specific amendment, which deals with the method of election rather than campaigning. Perhaps the hon. Gentleman would address his remarks accordingly.

Nicholas Winterton: I greatly respect you, Madam Deputy Speaker, and will seek to honour your ruling and your request.
	The electoral system has a bearing on the matter. Because the Electoral Commission was concerned about the impact of the change, it wanted to limit the pilot project to two regions rather than extending it to almost half of England. There is a grave risk—

Andrew Bennett: Will the hon. Gentleman give way?

Nicholas Winterton: I am happy to give way to the hon. Gentleman—a closeish neighbour in the north-west.

Andrew Bennett: When the European elections are held under the proposed system, I should not want the hon. Gentleman to feel that he was redundant. I am sure that he will be happy to continue knocking on doors for the Conservative candidate in those elections right up to polling day, to ensure that all the postal votes are returned.

Nicholas Winterton: That is one of the friendliest interventions that I have taken in almost 33 years in this place. I am grateful to the hon. Gentleman and am only sorry that he is standing down at the next election. No doubt that will give him an opportunity to come to Macclesfield to encourage whichever of his party's candidates stands against me.

Patrick Cormack: Will the hon. Gentleman be Lord Denton or Lord Reddish?

Nicholas Winterton: I am not sure.
	I believe fervently in the personal relationship between the elected and the electorate and I am worried that a system of all-postal elections will break that down. I am particularly concerned about the security and integrity of the electoral register because of the fraud that may arise under the new process. If the Minister can give me some assurances I shall be grateful, but as things stand I shall most certainly vote to uphold their lordships in their amendment.

John Pugh: My remarks will be brief. I have a strong sense of déjà vu. On a previous occasion, I suggested that choosing the north-west as a pilot area was not a good idea and I suggest the same today.
	Returning officers in the north-west certainly have concerns, not about their own efficiency but about the confusion that will be created in the mind of the electorate. In the north-west, we have 80 per cent. voting on atypical, all-up local council elections—not by thirds and not on the usual boundaries in every case—while the European elections are held according to a completely different system. That is complication upon complication, which in normal circumstances would create a lot of extra work for polling clerks. It is innovation piled on innovation.
	The Government expect that people receiving a mountain of paper—explanatory notes and so on—will feel more motivated to vote and more confident in doing so. However, a sane person would predict much confusion and a high number of errors. The system will give no assurance to the electorate and it will certainly not reassure candidates in tight contests. The Government have put forward a new argument today—developed for the purpose—that complication is actually an advantage and can help the pilots.
	The Electoral Commission agrees fundamentally with me and Opposition Members. It has serious concerns about fraud and said that the north-west was not ready for such a pilot. In our last debate on the measure, I concluded my speech by observing that, given the evidence and the comments of the Electoral Commission, anyone who went against its views would seem to be acting purely from naked party political objectives. That is still how it seems.
	During our previous debates, I was—strangely—impressed by the right hon. Member for Bromley and Chislehurst (Mr. Forth) who, like some Government Members, argued that decisions about the voting system are properly the matter of Parliament, not of the Electoral Commission. He drew the logical conclusion that there was little point in the Electoral Commission at all—there was no point in its making recommendations or even existing.
	There is a serious weakness in the Government's position, because they allow the Electoral Commission to make recommendations so that any proposal will be free from the taint of party political advantage and will have a degree of independence, yet when push comes to shove and those independent recommendations are not to their liking, they overrule them for—it is suggested—party political advantage. If that is the case, the Electoral Commission is simply being reduced to a fig leaf for straightforward brutalist politics. If I were the chairman of the Electoral Commission I should be considering my position. A resignation would certainly force the Government to come clean on the issue.
	Some Labour Members suggest that the all-postal system does not so much help Labour but shores up the democratic vote against the likes of the British National party, to prevent it from winning a Euro seat, and that could be the hidden plan, for all I know. Stopping the BNP is a laudable objective, but an all-postal ballot is no more likely to achieve it than other means. The defeat of the BNP in the north-west will be secured neither by that means nor by taking a media circus to confront it in Burnley. To defeat the BNP in the north-west, we need to out-campaign it, as the Lib Dems largely do in Burnley. I was privileged to assist the Lib Dems there recently when the BNP had a seat taken from it by good old-fashioned campaigning; the BNP was defeated at the ballot box.
	I suggest to Labour Members that they will not defeat racism by skewing the voting system; we defeat racism by winning the arguments against it.

Kevin Barron: I do not disagree with the hon. Gentleman about taking on any party—that is what campaigning and politics are about. However, it is fundamentally wrong to say that an all-out postal ballot would skew politics. My experience is the opposite; such ballots encourage participation. Of course, we shall have to wait and see, but if the tide is running against a political party—no matter which one—a higher turnout means that it will be drowned faster.

John Pugh: I agree that an all-postal ballot would not actually skew politics, but to go against the advice of the Electoral Commission looks like strange and shameful shenanigans. Equally, there is a certain degree of feebleness in believing that one cannot beat the BNP in any other way.
	In conclusion, we may—oddly enough—need the non-elected Chamber to uphold democratic values in this case.

Christopher Leslie: With permission, I should like briefly to respond to the debate. I apologise to the House for having spoken at length in opening the debate, but I thought it important to set out in detail the Government's case and I sought to give way to a number of hon. Members. I hope that that was a useful process, even though I may well not have persuaded some Opposition Members, but I live in hope.
	The hon. Member for Surrey Heath (Mr. Hawkins) reiterated his opposition to all-postal piloting. I explained the rationale behind selecting the four regions that we have chosen. We very much followed the ranked order of the potentially suitable regions suggested by the Electoral Commission. He also repeated a number of allegations that were made in the other place about impropriety in the north-west, many of which are unsubstantiated. Certainly, no convictions have resulted from any all-postal piloting experience. That is also an important point to put on the record.
	My hon. Friend the Member for Denton and Reddish (Andrew Bennett) said that he is a keen advocate of postal voting. He made his views loud and clear, and they are now on the record. It is useful that his opinion has been aired in the debate.
	My right hon. Friend the Member for Rother Valley (Mr. Barron) made an important point in quoting the Electoral Commission's opinion that there is no evidence that postal voting is any more prone to fraud than conventional voting.
	The hon. Member for South Staffordshire (Sir Patrick Cormack) made an interesting and wide-ranging speech. He mentioned his possible attraction to compulsory voting, which, compared with all-postal voting, seems even more radical, but his views are also on the record.
	My hon. Friend the Member for Bradford, North (Mr. Rooney) highlighted again the flaws of the conventional voting system. Indeed, postal voting will continue to be part of the conventional voting system. He also highlighted some of the possible advantages that may well flow from all-postal voting.
	The hon. Member for Macclesfield (Sir Nicholas Winterton) thought that we should consider other ways to encourage participation in our democracy. For example, he wanted to assert the House's importance to the wider world. If the House reaches its own decision on all-postal voting tonight, I hope that the other place will allow the House to have its way. That is an important part of the process.

Nicholas Winterton: When I mentioned Parliament and the House, I was referring to the House of Commons and the House of Lords. I have the greatest regard for their lordships in the other place, as an amending and delaying Chamber.

Christopher Leslie: With that little footnote to Hansard, I am sure that the House will note that view.
	The hon. Gentleman also mentioned his concern about the need for anti-fraud measures. The new offences that we have included in the Bill—for example, extending the offence of personation outside polling stations for the first time—will go some way, with the extra efforts that regional returning officers are making, to ameliorate concerns about fraud.
	The hon. Member for Southport (Dr. Pugh) said that he had a sense of déjà vu about his own speech—so did other hon. Members. It is a pity that he feels that the Electoral Commission should be the decision maker in this matter. It advises on such matters, but Government and Parliament make the ultimate decisions. We are accountable to the electorate, and the Electoral Commission is happy with that situation.
	All-postal piloting is worth while. We are trying to make participation easier for all electors. None of the obstacles that hon. Members have raised about Yorkshire or the north-west seems insurmountable, and regional returning officers there are now keen to proceed. The point of extending the scale of the pilots is to test systems and capabilities and address some of the security concerns. There is no evidence at all to suggest that including Yorkshire and the north-west as pilots will cause any risk or harm.
	I hope that we can resolve this matter today, and allow regional returning officers to get on with the job. The elected House of Commons should have the final word on which regions to pilot, and I urge hon. Members to support Government amendment (a).

Question put, That the amendment to the Lords amendment be made:—
	The House divided: Ayes 269, Noes 166.

Question accordingly agreed to.
	Lords amendment, as amended, agreed to.
	Lords amendment No. 2 agreed to.

Clause 2
	 — 
	Pilot Order

Lords amendment No. 3.

Christopher Leslie: I beg to move, That this House disagrees with the Lords in the said amendment.
	Lords amendment No. 3 would require a declaration of identity to be used as part of the pilot schemes. That issue was discussed at great length in another place and the Government made clear their intention to mandate it within the pilot order that a ballot paper must be validated with a security statement signed by the elector alone. We have considered the issues raised and do not intend, as the amendment suggests we should, to require electors additionally to obtain the signature of a witness.
	We have taken our lead from the Electoral Commission in this case. In its report entitled "The shape of elections to come", it identifies a number of reasons for utilising the security statement with a single signature in place of the declaration of identity with a witness signature from a third party. The commission feels that the requirement to complete a declaration discourages some electors from voting as it could be difficult to find a witness, meaning that there is a risk of disfranchisement for some. It also feels that the need for a witness, involving another person in the process, could increase the risk of a breach of security, as the witness may see the elector's vote, which would mitigate the measure as a safeguard against fraud.
	The commission reported that, in 2003, all the local authorities carrying out all-postal pilots for the second year running would have preferred to dispense with the declaration of identity with a witness signature, as in their view it unnecessarily increased the number of rejected ballot papers. The commission noted:
	"In Trafford (in 2003), just 414 ballot papers were rejected out of a total return of 84,613. Last year, with a declaration of identity, 2,164 ballot papers had to be rejected."
	That equates to 2.5 per cent. of the total turnout. Piloting is about learning lessons, and the clear lesson that has been learned from previous pilots is that the use of a witness requirement in all-postal ballots risks increasing disfranchisement and compromising secrecy and security.

Eric Forth: I understand that the Minister might want to curtail his remarks in this part of the debate, but he did skate rather quickly over the analysis that he gave us. Did Trafford authority explain why it thought that ballots with a sole signature were more easily accepted than those signed by a witness? Why were so many more rejected in the second case than the first, and does that give us some clues about what is going on?

Christopher Leslie: All that I can go on is the report of the Electoral Commission, which surveyed local authorities and found that they said that they would prefer to dispense with the declaration of identity and witness signatures. I suspect that that is because of the extra complexities and hurdles that that creates for an elector, such as finding a witness, ensuring that the witness form is filled out correctly as well as the ballot paper and so forth.
	That is not the only reason why a witness requirement is not needed. It might discriminate again those who are disabled or people who find it difficult to get a witness. There might be a specific need to consider the impact of witness requirements on people with disabilities. Officials from my Department recently met representatives from Scope and the Royal National Institute of the Blind, which expressed the strong view that a witness requirement provides another obstacle that bars many disabled people from voting in secret at their convenience. Scope felt so strongly about the issue that it wrote a letter expressing its views, which stated:
	"We are clear that requiring voters to have their ballot witnessed by another person not only increases the likelihood of people spoiling their ballot or returning them uncompleted but also puts many disabled and older voters, who are more likely to be more isolated or live alone, at a substantial disadvantage."
	I thought it important to state Scope's view to the House.

John Wilkinson: Will the Minister explain how the presence of a witness to verify a signature would make it more likely that a voter would spoil his or her ballot paper because I do not understand that logic? Will he guide me through that, because I would have thought that the contrary was the case? Surely the process would be easier for a person with a visual handicap if a witness were present than if there were no witness?

Christopher Leslie: People with a visual impairment might well require somebody to help them to cast their ballot, but returning officers can assist those voters. However, the requirement would put a specific hurdle in front of electors who did not normally come into contact with people who could witness their ballot paper, especially if they wished to cast their vote in secrecy.
	The forgery of one signature does not preclude the forgery of a second. It has been argued that a declaration of identity would be a more effective deterrent against fraud than the security statement with a single signature that we propose. However, it must surely be the case that people prepared to risk the consequences of forging an elector's signature would not be put off by the need to forge a witness signature on a declaration of identity. I trust that the House will disagree with that aspect of the Lords amendment.
	The Lords amendment would also require returning officers to send out receipts or acknowledgements to everyone whose vote was received. I urge the House to resist that suggestion. The pilots are designed to build on the experience of previous schemes. The use of acknowledgements has not been piloted before and the Electoral Commission has not recommended that approach. Acknowledgements are not provided for postal votes returned in a conventional election. It would be extremely risky to pilot acknowledgements for the first time on such a large scale given that we have no experience to draw on.
	Additionally, such a measure would be extremely costly and would put a significant additional administrative burden on returning officers and their staff. Initial estimates put the total cost throughout four regions at between £2 million and £2.5 million, and I am sure that Opposition Members would not want that additional spending to be incurred. That assessment is also reflected in the views of the Electoral Commission, which, in a statement produced for Report in another place, wrote:
	"the requirement to send individual acknowledgements will place a considerable burden on Returning Officers and their staff at an extremely busy time, and it would be difficult to guarantee a swift acknowledgement. Any delay in acknowledgement could generate unfounded anxiety on the part of voters; and generate further work for the Returning Officer in dealing with queries."
	It is thus clear that opposition to the amendment comes not only from the Government but from those with practical experience of running and assessing pilots.
	It is doubtful that the receipt process would be an effective anti-fraud measure. We are taking steps to reduce risks in such situations as houses in multiple occupation, but an individual who is willing to accept the consequences of fraudulently taking an elector's vote might well put in place contingencies to intercept any acknowledgement. There are thus many ways in which the measure would not be as strong an anti-fraud measure as it might appear to be. We feel very strongly about that.

Graham Brady: The Minister says that the Government are taking steps to prevent fraud in houses in multiple occupation. Will he tell us what those steps are?

Christopher Leslie: I certainly will. Regional returning officers have already considered the matter in some detail. They are looking at houses in multiple occupation in their geographical areas. They are noting and visiting them and ensuring that there are mechanisms through which ballot papers can be delivered to individual apartments within the curtilage of houses in multiple occupation, if necessary. Regional returning officers have been paying great attention to the matter, which was discussed in Committee and on Report.
	We feel strongly that the receipt and acknowledgement process would be unnecessary. It would be expensive and would not represent a useful anti-fraud mechanism. I hope that the House will reject Lords amendment No. 3.

Nick Hawkins: As my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) implies, not on the strength of what the Minister said—it was very weak—would Conservative Members agree to overturn a provision that the other place rightly put in the Bill. As I have already said, the Government lost the vote on the amendment in the other place heavily—by 157 votes to 110. I wish to refer to what was said in another place by my noble Friend Baroness Hanham, and by the Liberal Democrats, Lord Rennard and Lord Greaves.
	Conservative Members believe that the dangers of fraud and personation could be significantly reduced if, as the amendment provides, a signature on the declaration of identity were required. The matter was debated in Grand Committee in another place on 26 January 2004, and debated again on 23 February 2004, which is when the vote took place. On 26 January, Lord Rennard spoke for the Liberal Democrats and pointed out that in all-postal voting pilots, his party, like mine,
	"regard it as absolutely essential that there are necessary and proper safeguards, as far as they can be introduced, to deal with some of the abuses"
	to which Lord Greaves had referred—I cited them in the previous debate. Lord Rennard continued:
	"Those of us who have . . . had to deal at first hand with . . . real problems with our electoral process are . . . more sceptical"
	than Ministers are
	"about the problems that will occur if postal voting"
	or all-postal pilots are
	"rolled out in future. Postal votes need to have a witness to say that the person receiving the postal vote is the person for whom the postal vote was intended."
	As he rightly said, the measure
	"would be an effective deterrent against fraud."

John Gummer: Is not the central issue raised with the Minister that of houses in multiple occupation? I did not find his explanation convincing. It seems that nothing is being done; the matter is only being considered. Can my hon. Friend think of anything that would be more effective than ensuring that a ballot paper is given an endorsement each time so that people do not pick up at least half a dozen votes, vote in one place, then send them off in the post?

Nick Hawkins: My right hon. Friend is right. I was coming to what was said in another place about houses in multiple occupation, and his intervention is helpful. I agree that the Minister is not saying that anything is being done. There is nothing to that effect on the face of the Bill. We tried to debate the matter in Committee and to introduce more safeguards, which another place has been successful in achieving.
	In Grand Committee, the noble Lord Rennard talked about the protection needed in particular for people in houses in multiple occupation. He said:
	"Houses were mentioned where perhaps 10 postal votes were put through a communal letterbox and left in the hallway . . . The first person who picks up those 10 postal votes will be able to fill them in and send them back."
	It would be
	"a significant deterrent if those votes were not counted unless there were 10 separate declarations of identity, filled in by the person by whom it was intended that the postal vote should be received and witnessed by another person. Indeed, if there were 10 people in the property, that should not be very hard to do."
	I entirely agree. He went on to say:
	"Such a measure would make the intimidation and fraud"—
	examples of which were given by Lord Greaves and which I mentioned earlier—
	"very much harder. It is one thing if one could simply go to someone's house and say, 'I have come for your postal vote—take it away and fill it in in your own good time, and there is no record of identity'. It will be very much harder for someone to go to your doorstep and say, 'I have to take away your postal vote. By the way, I also need you to sign this piece of paper that confirms you are the person to whom the postal vote was sent; that I know who you are and that you have filled it in yourself'."
	Again, I entirely agree, as my noble Friend Baroness Hanham did. Lord Rennard concluded:
	"The declaration of identity is essential for us to agree with this principle of all-postal pilot experiments."—[Official Report, House of Lords, 26 January 2004; Vol. 657, c. GC24–25.]
	He said that it would also be helpful to send out receipts. If a receipt is sent to the elector, it gives the elector confidence that the process is working properly, which he or she would not otherwise have.

Eric Forth: I sense that my hon. Friend is in only his preliminary remarks and will come to a more profound analysis as we make progress. I hope that he will comment on the Minister's astonishing assertion that people with disabilities would find it more difficult to find someone to witness their signature than others would. Surely people with disabilities are more likely to have carers who are interested in and concerned with their welfare, and are therefore much more likely to be supported in that regard than those of us who are not in that condition. Will my hon. Friend comment on the Minister's rather facile assertion?

Nick Hawkins: I was surprised that a couple of charities, mentioned in another place, suggested that this relatively straightforward and simple precaution would cause problems. I agree with my right hon. Friend that the regular presence of carers would make the position easier for disabled people.

Tom Clarke: My hon. Friend the Minister, who made a convincing case, did not simply give his own view. He mentioned Scope, which is not just another charity. No organisation has done more work to encourage access to voting and polling. I think its views should be taken more seriously.

Nick Hawkins: The right hon. Gentleman knows that I have great respect for his views. We always consider carefully what respected charities propose, but it is still possible to disagree, as my right hon. Friend has done. However, I was not seeking to belittle Scope's submission. The right hon. Gentleman knows me well enough to know that I always take the views of respected charities and, indeed, his views, seriously.
	The concerns raised by Opposition Members here and in another place about the extra precautions that need to be included in the Bill to prevent personation are serious. My noble Friend Baroness Hanham referred to the concerns expressed by senior police officers in the west midlands about the increase in personation. The noble Baroness Gould of Potternewton described some of the tactics employed by Militant Tendency in the 1980s in respect of personation at polling stations. Other noble Lords, such as Lord Alton of Liverpool, mentioned what had gone wrong with personation in Liverpool in the 1980s. There are abuses and examples of fraud in a number of places. That is why another place was right to insist that the extra precautions should be included in the Bill. We think that they should be upheld in that, and we will certainly vote to that effect.

Joyce Quin: I strongly support what my hon. Friend the Minister said in giving the Government's view on the changes introduced in another place. I am disappointed with the Lords amendment and regret the determination of Opposition parties to do their utmost to prevent all-postal ballots. They seem to think that such ballots cannot be conducted without large-scale fraud. As a result, I am starting to feel somewhat insulted on behalf of my constituents, who have had three successful experiments with all-postal voting without any fraud taking place. Given the success in such areas, I wish that Opposition Members would look much more at the evidence than at unfounded fears.
	I was very disappointed that the noble Lord Rennard, on behalf of the Liberal Democrats, said that without the changes even the north-east should not be a pilot region, despite the fact that more than 50 per cent. of its population have experimented successfully with all-postal ballots. It is important to bear that statistic in mind.
	Ministers here and in another place have made the important point that the Electoral Commission does not favour the added hurdles that are being proposed. Given that Opposition Members extolled the commission's role, it is ironic that they are prepared to fly in its face on this issue.
	I agree with what my right hon. Friend the Member for Rother Valley (Mr. Barron) said. He thought that a great deal of party politicking had occurred in another place, and that is regrettable. People of all parties in my area have very much welcomed the change to all-postal ballots. They will be extremely disappointed if the amendment is upheld tonight.

David Heath: Judging by the comments of the right hon. Member for Gateshead, East and Washington, West (Joyce Quin), for whom I have a great deal of respect, a casual listener to the debate might assume that the addition of a new barrier to postal voting was being proposed. However, it is in place already. It is exactly the position that the right hon. Lady had with her all-postal ballot. It is the position that will apply for half of England, all of Scotland and all of Wales in June when the elections take place.
	I note that the right hon. Lady shakes her head, but what I have said will be the case. That is what will happen in every area outside the pilot regions with postal ballots. Those who use the postal ballot will be required to have a countersignature of a witness to a declaration of identity. It is hardly a novel approach that is being advocated. It is a continuation of current practice.

Joyce Quin: Surely the hon. Gentleman will accept that when we are having all-postal ballots the scale of what is involved is extremely important. My local authority—Gateshead—has been extremely successful in this context but has been very much opposed to these procedures. It feels that they will make it extremely difficult to have an all-postal ballot in the area in time for the elections.

David Heath: I can only observe that it has not been an obstacle until now for the councils that have undertaken all-postal ballots.
	We must have a care in the House not to provide opportunity for electoral fraud where that opportunity is currently reduced. I accept that there is a better way of doing things. I accept that that is personal registration with the electoral registration officer, by means of providing proof of identity that is individual to that person rather than requiring an intercession by a witness. That is what I would like to see universally applied as the authentication of postal ballots. However, we are not yet in that position.
	In the circumstances, it seems perverse to throw away the rather rudimentary and not entirely acceptable precaution that we have, in the absence of a replacement that I think would be much better. That seems to be the right precautionary approach to take. It is the approach taken by my noble Friend Lord Rennard, which happily secured the support of others.
	I accept that there are real issues to do with people with disabilities. The House knows that I do a fair amount of work with the RNIB, which has serious concerns, as has Scope. Not all those concerns are focused on the issue of identity being verified by a witness. People with visual impairments could easily be provided with templates to enable voting to take place. Another issue is single-channel voting and whether alternatives should be available for people with visual impairment.
	I accept that there are issues concerning the secrecy of the ballot that involve people with disabilities, which we should take seriously. Equally, we should take seriously the possibility of fraud in postal ballots that is not confined to the pilots and not to all postal ballots. However, they might be multiplied in their effect and might take place within current voting arrangements.
	If right hon. and hon. Members read the evidence given to the Select Committee on the Office of the Deputy Prime Minister, they will see at least anecdotal evidence, if not objective evidence, of potential for fraud in houses of multiple occupation. There is at least anecdotal evidence that increases in turnout are not largely effected by an increased number of households voting, but by more people within households voting.
	That should be a matter of at least suspicion if not concern. It suggests that the head of a household, or some person within a household, has rounded up the entire family rather than there being a genuine widening of the franchise into new areas.
	I want to see these experiments succeed, and I want also to encourage ways of voting. However, I ask the House to consider carefully, before removing the precautions that are now in place, the effect of voting against the amendment from another place. It is to remove for half of England—not the other half, not for Scotland, not for Wales, not for the elections in London and not for the elections in most of the country next June, but just for the pilot areas—a precaution that has hitherto been thought necessary to avoid electoral fraud. I do not think that we should do that. We should resist the Government's attempt to resist the amendment.

John Wilkinson: This appears to be a modest amendment in the Government's view, and an unimportant one. However, the issue at stake symbolises all that is worst with this Administration. Their instinct is to play fast and loose with our democracy, and they do not particularly care whether there should be effective controls against impersonation. 8.45 pm
	Impersonation is a problem that is traditionally endemic in elections in Northern Ireland. In the first constituency in which I stood—I can speak about this, because I lost that February 1974 election—a great Pakistani friend came up to me and said, "Mr. John, Mr. John, I have done so very well. I have voted as my uncle in Pakistan and I have voted as my brother who is dead." I was somewhat taken aback by that and explained that it was not the normal way of doing things, but he had been able to go to the polling station and impersonate in person. It is much harder to impersonate in the privacy of an individual's home, and the wise Lords amendment No. 3, from that old fox Lord Rennard, seeks to ensure that that is the case. I trust that old fox in the other place much more than I trust the promising Minister who is gabbling his lines without any great credibility.
	Like the hon. Member for Somerton and Frome (Mr. Heath), I wonder why we need to call into question the status quo in the conduct of postal ballots. The postal voting system has worked entirely well, and it is a normal procedure to verify identity. For example, we seek a witness for passports and driving licences to corroborate the fact that impersonation is not taking place. Why should we debase the electoral process by seeking lower standards? We should improve standards and enhance controls against fraud and impersonation, rather than the contrary. What is the reason for doing the contrary, as is the case here? It can only be party political. The Labour party makes a facile assumption, to use the word that my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) used, that everything has to be laid on easily for its supporters. If anything is difficult—

It being three hours after the commencement of proceedings on the Bill, Madam Deputy Speaker put the Question already proposed from the Chair, pursuant to Order [this day].
	The House divided: Ayes 268, Noes 163.

Question accordingly agreed to.
	Lords amendment disagreed to.
	Madam Deputy Speaker then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.
	Lords amendments Nos. 4 to 50 agreed to.
	Motion made, and Question put,
	That a Committee be appointed to draw up a Reason to be assigned to the Lords for disagreeing to their amendment No. 3; Geraint Davies, Mr. Nick Hawkins, Mr. David Heath, Mr. Christopher Leslie and Ms Bridget Prentice to be members of the Committee; Mr. Christopher Leslie to be the Chairman of the Committee; Three to be the quorum of the Committee; Committee to withdraw immediately.—[Ms Bridget Prentice.]
	The House divided: Ayes 266, Noes 124.

Question accordingly agreed to.
	Reasons for disagreeing to the Lords amendment reported, and agreed to; to be communicated to the Lords.

Gangmasters (Licensing) Bill [Money]

Queen's recommendation having been signified—

Alun Michael: I beg to move,
	That, for the purposes of any Act resulting from the Gangmasters (Licensing) Bill, it is expedient to authorise—
	(1) the payment out of money provided by Parliament of—
	(a) any expenditure incurred under the Act by a Minister of the Crown or government department or by a body performing functions on behalf of the Crown, and
	(b) any increase attributable to the provisions of the Act in the sums payable out of such money under any other Act, and
	(2) the making of payments into the Consolidated Fund.
	On Second Reading, I confirmed that the Government were content for the Bill to proceed, and the promoter, my hon. Friend the Member for West Renfrewshire (Jim Sheridan), agreed to work with us in Committee to ensure that the detailed provisions deliver both his and the Government's objective: a reduction in the exploitative activities of gangmasters.
	Let us be clear: gangmasters play a necessary role by providing the flexible labour supply required to underpin the production and supply of food. However, for far too long that flexibility has been delivered at the expense of the workers involved, and the current approach fosters illegal working.
	The Gangmasters (Licensing) Bill seeks to tackle those abuses through the introduction of a licensing scheme and the creation of a register of licensed gang labour providers. It will introduce welcome transparency to the labour supply chain and ensure that the supermarkets and other purchasers of fresh and other produce can insist that their suppliers use only licensed labour providers.
	The Bill will create two new offences—supplying labour without a licence and using an unlicensed labour provider—and the Secretary of State will be authorised to appoint officers to enforce those provisions. Final decisions on the precise role and nature of the body responsible for issuing licences have yet to be taken. We are discussing the best way to work with the industry, trade union representatives, the National Farmers Union and the retail trade. It is clearly in everybody's interests to harness their knowledge and experience and that of legitimate gangmasters who want to work within the law and who should be able to compete effectively in the market while doing so. It is in their interest and ours to work together to create an effective licensing body rather than merely a top-down bureaucratic structure, and I am delighted by the co-operation that I have received since Second Reading.
	The code to be observed by licensed gangmasters will be important.

Geraldine Smith: On enforcement, does the Minister agree that if the Bill is to be successful, we need a robust system of enforcement and a lead Minister to take responsibility for it?

Alun Michael: The Department for Environment, Food and Rural Affairs leads on the legislation. My hon. Friend knows that the Department for Work and Pensions leads on Operation Gangmaster, which has been successful in enforcing the law in a number of ways but is not enough on its own. That is why we support the legislation and the introduction of the licensing system, which was a point argued by my hon. Friend the Member for West Renfrewshire when he introduced the Bill.

Patrick Cormack: Will the right hon. Gentleman go a little further than he did in answering the hon. Member for Morecambe and Lunesdale (Geraldine Smith)? Which Minister in which Department will supervise this important Bill and ensure that it gets on to the statute book?

Alun Michael: Responsibility for the legislation and the licensing system lies with DEFRA, so the Secretary of State for Environment, Food and Rural Affairs is responsible and I deal with the Bill in this place. My noble Friend Lord Whitty has played a considerable part in promoting co-operation on Operation Gangmaster, but I am accountable to this House, as I was on Second Reading and will continue to be as the Bill goes through Parliament.
	As I indicated, important issues include not only the question of the licence but the expectations and requirements placed on licensed gangmasters. We are examining the outcomes of the best practice project run by the Ethical Trading Initiative with DEFRA and industry support, which will inform the licensing system and help us to calculate the cost of an adequate monitoring system. Those outcomes will also show us what ethical audit can and cannot do, which will help us to create the right environment to enable enforcement to take place. Lord Whitty and I met representatives this morning for an update on the work of the project.
	However it operates, it is intended that the licensing process should be self-funding with a fee charged to cover the cost of the licence applications and periodic renewals. An applicant's business will also be audited to ensure that procedures are compliant with the terms of the licence, which again raises the issue of exactly what the requirements should be.

Andrew George: The Minister and the Government will not want to involve themselves in unnecessary expense. In view of that, does he agree that it would be far better for the Government to use existing provisions and regulations—for example, the agricultural compliance unit in the Inland Revenue—rather than creating new organisations or regulations when an effective method is already available?

Alun Michael: The hon. Gentleman is right, and that point applies to a number of areas. The Inland Revenue has a considerable interest in ensuring that people pay their tax and national insurance. We have a strong interest in ensuring that the minimum wage is observed and that agricultural rates are paid. The point of the licensing system is that it would draw a line between those who are legitimate and working within the system, and those who are outside it. That would make easier the enforcement of such matters as the payment of tax. The current situation makes it easy for people to operate in an exploitative way.

Roger Gale: I am worried by what the Minister said a moment ago. In east Kent, we have two problems—a high number of immigrants looking for work and an impoverished farming community—

Madam Deputy Speaker: Order. I do not wish to pre-empt the hon. Gentleman, but I hope that his question will relate to the money resolution.

Roger Gale: Yes, absolutely. The Minister said that the licence would be self-financing. To me, that means that the farmers in east Kent will end up paying, and they are on the breadline already.

Alun Michael: The hon. Gentleman makes exactly the point that I have been making in our discussions with the industry. We want something that is effective but that does not put excessive burdens on industry. On Second Reading, we discussed the level of fee that might be charged and the hon. Member for Boston and Skegness (Mr. Simmonds) mentioned the figure of £3,000. That should not be necessary and, indeed, a much lower fee should be achievable. We do not want to increase bureaucracy. Rather, we want to work with those who know the industry and how it works—the trade unions and farming organisations—to ensure that bureaucracy is kept to a minimum and effectiveness is maximised. Resources already allocated to the matter must be properly and effectively deployed, and that is why I make the point that the costs involved would be determined, in part, by the conditions attached to the licence. The costs are provisional, but are likely to be considerably less than the figure mentioned on Second Reading.
	Robust cost estimates will be prepared once the consultation on the detail of the licensing provisions has been completed, and we will be able to discuss the issue in full in Committee. Much of the detail will have to be worked out in Committee, but we are engaging vigorously with people in the industry to create a scheme that works for the industry, protects those who are currently being exploited and allows legitimate gangmasters to work within the law without being undermined by those who work outside it.

Michael Fallon: The Minister said that robust estimates would be prepared and that the scheme would be self-financing. Can he give a rough estimate of the public funding that will be required before the cost is covered by fees?

Alun Michael: I cannot do so at the moment, because we are in discussion with the organisations involved about the best way to use the strengths of the industry and those of Government to work together. If the issue of gangmasters could be dealt with easily—if we could wave a magic wand—it would have been done years ago. It is a complex situation, with people working in a complex market to provide labour for farmers such as those mentioned by the hon. Member for North Thanet (Mr. Gale). It would be possible to create a very bureaucratic structure that did not even hit the target.
	I am pleased by the way in which some legitimate gangmasters, the National Farmers Union and the Transport and General Workers Union have proved so prepared to sit down with us and tease out the most effective way to achieve the aspirations set out in the Bill. While the Government must have a commitment to meeting the finance necessary to implement the Bill, we must also ensure that costs—there will of course be set-up costs that will affect the industry—and the impact on the industry are kept to a minimum.

Andrew George: The Minister talks about using the strength of the Government. He will recall his intervention on me during Second Reading and the focus at that time of the debate on the need for Departments to break down potential barriers such as data protection. It was argued that farmers and gangmasters should not be asked to replicate forms and information to different Departments separately. What discussions has he had with his colleagues in other Departments to ensure that that does not happen?

Alun Michael: The hon. Gentleman is right, and I did say on Second Reading that we would seek to achieve that. That is not a requirement in the Bill, but we should use existing resources and powers in other legislation and ensure that they are co-ordinated effectively. Where co-ordination has been tried—in Lincolnshire, for example, through Operation Gangmaster—we have seen the benefits and learned lessons from it. It has also helped us to understand the best way of running a licensing system and the requirements that would be placed on licensees.
	Overall, it is not anticipated that the Bill will lead to any significant net increase in Exchequer expenditure, because the additional resources allocated to enforcement activities will be offset by savings to the Exchequer in respect of lost tax, national insurance revenue and reductions in benefit fraud.

Andrew Miller: On that point, significant savings could be made in comparison with the sort of operation that had to be mounted—successfully—by the Department for Work and Pensions on the Dee estuary last year.

Alun Michael: My hon. Friend is right, and I am aware of his interest in ensuring that problems on the Dee estuary are properly tackled in a manner that will last. That is the concern of many hon. Members. For some time, we have seen an effort to co-ordinate work across several Departments and enforcement agencies. I gave more detail about that on Second Reading, when it was more appropriate. Those efforts have had some success, but clearly more is needed. That is why we supported the efforts of my hon. Friend the Member for West Renfrewshire to introduce legislation, and we welcome the opportunity to work with him and with organisations on both sides of industry to produce effective measures.
	Clearly, it is developments occurring in parallel with the legislation that will create the licensing system and a clear line between those who are licensed and those who are not. That will allow us to create a simple offence of operating while not licensed to do so. All that will make a difference to the geography of activities, though it will not detract from the complexities of some offences or of the market, which is far from simple. Nevertheless, the line will be created, and all hon. Members accept that that is important.

Geraldine Smith: On unpaid tax and national insurance contributions, does the Minister agree that in Morecambe bay it was estimated that there were between £6 million and £8 million worth of cockles, and that probably very little of that was paid back in taxation?

Alun Michael: My hon. Friend makes a fair point, which shows the value of individual enforcement agencies such as the Exchequer being involved in enforcement processes. The point of the licensing system, however, is to create the division between those acting illegally and those acting under a licence. That leads to a simple offence, whereas many other offences that have to be pursued require a considerable collection of evidence and drawn-out enforcement processes. The Bill will create two very simple offences, which should create an impetus towards virtue, if I may put it that way, within the farming industry and in the activities of gangmasters. I therefore commend the motion to the House.

David Wilshire: Over my 17 years in this place, I have worked out that something curious happens every day. Today's curiosity is a Whip speaking from the Dispatch Box. Perhaps it would be helpful to say that this is not my first outing at the Dispatch Box. My first and only other outing was on Friday 15 March 2002. On that occasion, our usual channels agreement nearly foundered because the business that was due to run until 2.30 pm ended a few seconds early, and it fell to me to fill those seconds. I managed 91 words before being cut off in my prime. This time I will manage more than 91 words and prove why I was given a non-speaking job in the Whips Office.
	This debate is not about the Gangmasters (Licensing) Bill. The Minister made some fair points and I very much welcome the opportunity to agree with much of what he said and to discuss the issues, but I am fairly sure that if I did so it would not be long before you, Mr. Deputy Speaker, told me that the debate was not about the Bill but about the money resolution. Having said that, I should like to say—probably—just one sentence about the legislation because it is important to set in the context of the Bill my comments on the money resolution.
	When the Bill was debated on 27 February, my hon. Friend the Member for North Shropshire (Mr. Paterson) made it clear that
	"The Opposition are wholly committed to ending the shameful activities of criminal gangmasters as soon as possible."—[Official Report, 27 February 2004; Vol. 418, c. 554.]
	I and my colleagues tonight stand four-square behind that commitment, but our commitment to that principle does not justify our allowing this money resolution to pass on the nod.
	The money resolution raises some important issues, so I listened carefully to the Minister in the hope that he would address those that concern us. I had hoped that he would tell the House how much taxpayers' money he wants us to authorise, yet he said that he could not be clear, so he did not do so. I had also hoped that he would tell us what the Government will spend that money on, but he was not quite sure about that either. It is because he did not answer properly either of those questions that I would contend that he is asking us to sign a blank cheque.
	Before we decide whether to support the money resolution, we need to know a number of things. As far as how much is concerned, all we have to go on at the moment is what the Minister said, and he said a number of things. He said that the legislation may or may not be self-funding; he hopes that it will, but he is not sure. Then he said that he will try to keep expenditure to the minimum, but did not say what that will be. He said that the fee might be £3,000 or it might be less; he was not sure.

Alun Michael: I referred to £3,000 because Conservative Members had cited that figure during the previous debate. Estimates of the cost of funding a licensing system have ranged in some work that I have seen between £1,000 and £2,000, but that is not sufficiently robust for me to come before the House and say, "That's what I think the figure is." That is why we are working with the industry to try to ensure that the figure is as low as possible and that the system is as effective as possible. We want an effective licensing system, but we need to ensure, as one of his hon. Friends said, that it does not impose an unreasonable burden on industry.

David Wilshire: I am grateful to the Minister for correcting that, but it does not matter who cited the figure. All that is clear is that we do not know how much the system will cost—regardless of whether the Minister or the £3,000 figure that I use is correct. He said that the cost might be £1,000 or £2,000. That is a 100 per cent. variation.

Geraldine Smith: Does the hon. Gentleman accept that the cost of doing nothing was the death of 20 young people? What price will he put on their lives?

David Wilshire: Of course, I accept that, which is why I made it crystal clear at the outset that we are four-square behind the attempts to get rid of that criminal activity. I am not raising these points on the basis that we should spend nothing. The House is being asked to vote on a money resolution for an unknown quantity of money, and we should know how much we are being asked to authorise before we authorise it. That is all I am saying; I am not arguing that we should never authorise anything.

Michael Fallon: No one objects to the Minister proposing a money resolution; that is why he is here—to ask for more money, and the hon. Member for Morecambe and Lunesdale (Geraldine Smith) clearly wants that money spent. The confusion is that, on the one hand, the Minister said that the scheme was self-financing, yet on the other he said that there would be no significant net expenditure. All we are asking is: what will be the net expenditure? If my hon. Friend or the Minister can help us on that point, we might foreshorten the debate.

David Wilshire: I cannot help my hon. Friend. I hoped that the Minister would help us. He shook his head when the phrase "self-funding" was used, but I wrote down his words. He said that the scheme might be self-funding but that he would need robust cost estimates for the information that he needed.

Alun Michael: I think that the hon. Gentleman is a little bit muddled. Fees will be charged for the licensing system, which we expect to be self-financing. That is why it is sensible to hold discussions between the Government, the promoter and sponsors of the Bill and the industry to ensure that the fees are sufficient to be effective but as low as possible to avoid burdens to the industry. That is the self-financing element. The establishment costs and the amount that might be needed for additional enforcement would of course fall to Government and they will depend, to some extent, on the outcome of those discussions. That is perfectly self-evident.

David Wilshire: I am grateful to the Minister. He confirms the point that I was making: he does not know what the scheme will cost, which underlines the importance of the House asking him that question, because I at least do not like signing blank cheques. Until the Minister gives us the figures, the only factual information we have to go on is in the motion, which refers to
	"any expenditure incurred under the Act".
	Any expenditure means a blank cheque and that is why we need more information.

Roger Gale: This debate is being held against the background of the highly emotive and terrifying circumstances that occurred in the constituency of the hon. Member for Morecambe and Lunesdale (Geraldine Smith). No one has any quarrel with that. However, the Minister is saying that the measure will be self-financing and we all know what that means: the cost will be passed on.
	In east Kent, in my constituency and that of my hon. Friend the Member for Sevenoaks (Mr. Fallon), farmers harvest cauliflowers, potatoes, top fruit and soft fruit, and their businesses operate at the margins of sustainability. If the costs of the measure are passed on to them, there will be another death—the death of those industries. We need the answers before we vote for the motion.

David Wilshire: I am grateful to my hon. Friend who makes my point for me very well indeed. That is exactly why a blank cheque is wrong. It is also why we need to know how much the cost will be, so that we can make up our mind whether it is a sensible amount, which will achieve a very laudable objective, or wasting money. That is the only point the Minister needs to address.

Nick Brown: Does the hon. Gentleman think that the cost of the licensing scheme for gangmasters, which operated for most of the lifetime of the last Conservative Government, was unreasonable?

David Wilshire: If the right hon. Gentleman will bear with me, I shall come to the existing regulations in a moment, but we need to deal with one more thing before we decide whether to vote for the money resolution. We need to know in some detail what taxpayers' money will be spent on. We have heard a general comment or two, but we are still not clear about everything.

Nick Brown: In fairness, a licensing scheme was in place for most of the lifetime of the last Conservative Government. The hon. Gentleman must have supported that scheme when the Conservative party was in power. Was the cost of that scheme unreasonable?

David Wilshire: The right hon. Gentleman must contain himself for a moment. I should like to deal with things in the order in which I set out to deal with them, and it will make much more sense if he allows me to do so. We have to decide what taxpayers' money will be spent on, but we do not even know that. The Minister referred—again, I noted this down—to the fact that the code will be important, but the Government have not yet worked it out, so how can we decide whether spending money on the preparation of a code is sensible until we know what it is? On other occasions during his introductory remarks, he said that decisions have yet to be taken.

Alun Michael: I ought to point out to the hon. Gentleman, because it seems to have escaped his notice, that the motion relates to a private Member's Bill. The Government have responded very rapidly by saying that we will help that private Member's Bill to become law. We have come before the House to say that we want the House to agree that money can be spent from public funds in support of those purposes, and it is clear what public money needs to be spent on: the establishment and enforcement of the scheme. The hon. Gentleman, by the way that he is approaching the issue, rather undermines his claim to support the efforts to deal with the mischief and evil perpetrated by some gangmasters.

David Wilshire: Absolutely not. I predicted that, sooner or later, a Government Member would try that one. However worthy a cause, nothing justifies signing blank cheques or telling the Government that they can do what they like. It is all very well for the Minister to say what he thinks the motion means. All I have got to go on is what the motion says. The preamble states that money can be spent
	"for the purposes of any Act resulting from the Gangmasters (Licensing) Bill",
	not just what the Minister says it will be spent on. It could be spent on anything— it is another wide-open opportunity for the Government to spend money.

Geraldine Smith: Does the hon. Gentleman agree with the National Farmers Union, when it says that it
	"believes that running the licensing scheme system is a function which government is best placed to undertake . . . and its establishment should be publicly funded."?

David Wilshire: I would love to debate that sort of issue, but I suspect, Mr. Deputy Speaker, that you would tell me that such issues arise under the Bill, not the motion.

Alun Michael: The hon. Gentleman has been a Member of Parliament in government, as well as in opposition. Can he tell me on how many occasions he intervened in debates on money resolutions to complain about the nature of their drafting when he was a member of the Government?

David Wilshire: No, I cannot, and I do not need to do so. The Government are dead keen on modernisation. They want their procedures to be brought up to date, and I have taken them at their word and decided that the modern way to deal with such things is to ask the Minister to answer sensible questions about how much he will spend and what he will spend it on. Until he answers those questions, all that we can go on are the words of the motion.

Roger Gale: We are now into Alice in Wonderland country. The Minister said in his opening remarks that the scheme would be self-funding, and we are now accused of trying to wreck a private Member's Bill. We are told that this is merely a Government money resolution, putting in taxpayers' money. Well, taxpayers' money comes from the public, but that is another story. The scheme will either use taxpayers' money that comes from central Government or it will be self-funding. I want to know whether it will be self-funding—if so, it will place a cost on the farmers—or will taxpayers' money that comes from central Government be used? It cannot be both.

David Wilshire: That is exactly what all Conservative Members would like to know, but we are not getting any sort of answer, so we cannot make up our minds whether what the Ministers is asking us to do represents a sensible way to solve a genuine problem or whether it is just another way to spend taxpayers' money. To make matters worse, paragraph (1)(b) of the motion refers not to any purpose of the Act, but to
	"any increase attributable to the provisions of the Act".
	That can include not only new expenditure, but an increase in current expenditure. Therefore, the spending commitment is wide open and we need more information on it.
	It gets worse still. On Second Reading—this picks up on the point that the Minister made about the private Member's Bill—the Minister said that he backed the Bill in principle but that the Government would need to make changes before they could let it reach the statute book. I understand that. The problem is that we are being asked to sign a blank cheque not for the private Member's Bill, which is what the Minister said to me a moment or two ago, but for a Bill the contents of which we do not know yet.
	The Minister has said that he will make changes to the Bill but has not told us what they are, yet we are supposed to let him have the money to do whatever he likes. That seems to be a silly way of trying to run a Government. If we do not have those details, if we do not know how much, if we do not know what it is to be spent on, if we do not know the changes that the Minister wants to make, how on earth can the House decide whether this is the best way of achieving what the hon. Member for Morecambe and Lunesdale (Geraldine Smith) properly wants and what we on the Conservative Benches want to help her to get? How can we decide without that information?

Michael Fallon: My hon. Friend is attributing some weight to paragraph (1)(b) of the money resolution. If we were precise now, and if the Minister had told us what the provisions of the Act were likely to be, we would already know what the increase attributable to those provisions was likely to be. Surely it is incumbent on the Minister to help my hon. Friend to specify what those provisions will be, so that we can judge what the increase attributable to those provisions will be.

David Wilshire: Yes. I have known the Minister some time and I thought that he might want to help us but it appears that he does not. He sits there and appears to be refusing to tell us how much, what for or what the changes will be.
	One other issue concerns me about the money resolution. It asks us to authorise yet more public expenditure on top of the huge increases that the Government have already agreed to. This is particularly relevant when we consider the points made by my hon. Friend the Member for North Shropshire (Mr. Paterson) on Second Reading on 27 February. He made it clear that there is existing legislation that, if properly enforced, might have prevented the Morecambe bay tragedy and could solve other problems.
	I am no expert. I cannot say whether that was right or wrong, but my hon. Friend is an expert and I am entirely content to accept what he says. He also pointed out that enforcing existing legislation properly would lead to immediate improvements, whereas going down the route of new legislation would mean delay. Therefore, another reason why we have to be cautious of the money resolution is that perhaps we should be exploring the existing legislation route before signing a blank cheque for any new legislation.
	There is one other reason for exploring the use of existing legislation.

Andrew Miller: Does the hon. Gentleman realise that existing legislation is costing the taxpayer a small fortune? He heard me intervene on my right hon. Friend the Minister. Did the hon. Gentleman know that the exercise conducted by the Department for Work and Pensions last year involved in excess of 500 public servants from seven or eight Government Departments? Surely he thinks that we need some consolidated legislation to stop that happening in future.

David Wilshire: I find that an interesting point of view but all I can say is that, if the hon. Gentleman is trying to suggest that what is being proposed tonight is a money-saving exercise, the Minister would have told us that. However, the Minister did not suggest any such thing, so I can only assume—

Alun Michael: I am sorry but the hon. Gentleman obviously has not listened to what I said because I referred to the savings to the Exchequer from proper enforcement. He seems to be making an extremely mealy-mouthed attempt at justifying opposition to the Bill. If he opposes the Bill, if he opposes the money resolution, which is in typical terms for a money resolution of this sort, and if he opposes the Government supporting a private Member's Bill on this issue, why does he not have the honesty to say so?

David Wilshire: I have made my position perfectly clear. The Minister makes my point for me. He says that there will be savings from proper enforcement, which is exactly the point that I was making to the House. He did not say that there are savings to be made by scrapping existing legislation.

Ian Stewart: Does the hon. Gentleman not accept that there is a difference of opinion among Conservative Members about regulation? Labour Members accept that minimal—yet appropriate and relevant—regulation is important. When regulation is relevant, as the Bill is, does it not cost? Surely the Opposition should finally say, "Actually, it is the right thing to do".

David Wilshire: As I said at the outset, I would be more than willing to debate that with the hon. Gentleman and to explain to him why he is wrong, but that would be to debate the terms of the Bill, not those of the money resolution. I do not want to fall foul of you, Mr. Deputy Speaker, so if the hon. Gentleman would like to meet me in Strangers Bar after the debate, I shall have a go at sorting him out and explaining things to him. For the time being, however, I must ask him to bear with me.
	We must consider the whole question of using existing legislation. Although such legislation exists, we are told that it has not been used properly and that if it were used properly, it would avoid delay. However, there is another reason why we should use existing legislation, because I assume that the House has authorised the spending of taxpayers' money on it. Rather than wasting expenditure on existing legislation, we should ensure that we get proper value for money from the original money resolutions passed by the House.

Ian Stewart: Does the hon. Gentleman accept that rather than sorting each other out, we need to sort out the problem with gangmasters? Does he accept that no matter what Government are in power, sorting out such problems costs money? The money resolution is important to ensure that something effective is done while there is such a problem in this land.

David Wilshire: I understand what the hon. Gentleman says, but he is again debating the Bill, which is not what we are here to do. We are here to get answers from the Minister about how much money will be involved, what he wants to spend it on and what changes he wants to make.

Andrew George: Will the hon. Gentleman give way?

David Wilshire: No, I will not. Before the end of the debate, I hope that the Minister will give us the answers.

Eric Forth: rose—

Mr. Deputy Speaker: I call Mr. Eric Forth. [Interruption.] Order. It is customary for hon. Members who wish to catch the eye of the Chair to rise in their place. Only one right hon. Member rose in his place, so I have called the right hon. Member for Bromley and Chislehurst (Mr. Forth).

Eric Forth: I want to follow on from the theme with which my hon. Friend the Member for Spelthorne (Mr. Wilshire) initiated his speech. I have armed myself with quotations from the other day's Second Reading debate to try to illustrate with great clarity the confusion in the Minister's mind—and thus, sadly, in ours—about the substance of what we are considering.
	On Second Reading on 27 February, the Minister said, "There are a variety"—well, I shall stop right there because that is typically bad grammar from today's ministerial team. I would prefer the phrase, "There is a variety", but I am a bit old-fashioned about such things. The Minister said:
	"There are a variety of concerns about the Bill as drafted, including the level of charges that might emerge, the operation of the licensing body and the engagement of the industry."
	He went on to say:
	"I am not convinced of the need to set up a new agency . . . We should consider in Committee the option of nominating or establishing an agency".—[Official Report, 27 February 2004; Vol. 418, c. 566.]
	I cite the Minister's quotes from Hansard to illustrate the fact that we are being asked to agree to a money resolution despite the fact that the Minister does not know what Bill will emerge from Committee, which reinforces the points made by my hon. Friend the Member for Spelthorne. I shall return to further quotes from the Minister in a moment, if I may, but rather than quoting from the Hansard report of Second Reading, I shall now give a few examples of what the Minister said in this debate. He said that robust cost estimates will be prepared—note that they have not been prepared, so there are no robust cost estimates to support the money resolution. He then said that there will be set-up costs, which he also confirmed in an intervention on my hon. Friend the Member for Spelthorne. The Minister also said that there will be no significant net increases in Exchequer costs, which my hon. Friend the Member for Sevenoaks (Mr. Fallon) emphasised. Finally, he said that the costs will be offset by increases in tax revenues. So a confused picture is emerging. All those different statements take us in a completely different direction with regard to the costs that the Bill will incur.
	Let us consider one or two of those statements because they are contradictory. When the Minister said that there will be no significant net increases in Exchequer costs, he was implying that the revenues will be met by the licensing regime, of which we do not have any detail, although he assumes that that will emerge from the Standing Committee. We do not know what the charges will be, as my hon. Friend the Member for North Thanet (Mr. Gale) said. We are in the invidious position of being asked to agree a money resolution without knowing the set-up costs, although the Minister hinted that he had a fairly good idea of the set-up mechanism, but without a costing, because the robust cost estimates will be prepared. He is telling us either that he knows the costs, but will not reveal them, or that he does not have a clue about the costs, but wants us to agree to the money resolution anyway.

Michael Fallon: I hope that my right hon. Friend is not going to give the Minister the benefit of the doubt. He clearly told the House that there will be no significant net costs, and we have to take his word for that. We have to assume that he has made some measurement of the costs because he has led the House into believing that the net costs of the set-up of the whole new regime, before the annual enforcement, will not be significant. Therefore, he must know roughly what they will be.

Eric Forth: You would think so, Mr. Deputy Speaker. My hon. Friend makes a good point, but it is more complicated than that. As the hon. Member for Morecambe and Lunesdale (Geraldine Smith) frequently says, the key is enforcement. If we are to believe that the Bill or, indeed, any other measure will be truly effective, the key to that is the effectiveness of enforcement, as hon. Members said on Second Reading, but we do not know how much money in the resolution will be guided towards enforcement or set-up, and how much may be offset by the costs of the licensing regime because the Minister is coy about that as well.
	Here is the question: will the licensing charges be set at a level to cover all the set-up and enforcement costs, or will they be set at a reasonable level, as my hon. Friend the Member for North Thanet would prefer, so that the activities can continue to be viable, but perhaps not cover all the costs? There is a dilemma that the Minister has been unable to resolve. He is saying, "Trust me. We'll go into Committee. I'll do deals with the Bill's promoter", and the scheme will emerge in some as yet unknown form for debate on Report and Third Reading, which we all look forward to very much because that will be key to everything. In the meantime, the money resolution remains formless and shapeless. We have no idea where the emphasis will be laid when the Minister juggles, as he has had to do up to now, between covering the costs, presumably keeping faith with the restraints that the Exchequer has laid on the matter—
	It being forty-five minutes after the commencement of proceedings on the motion, Mr. Deputy Speaker put forthwith the Question already proposed from the Chair, pursuant to Standing Order No. 52 (1) (a) (Money resolutions and ways and means resolutions in connection with bills).
	Question agreed to.

VISITOR FACILITIES

Motion made,
	That this House approves the First Joint Report of the Accommodation and Works Committee and the Administration Committee on Visitor Facilities: Access to Parliament (House of Commons Paper No. 324) and endorses the Committees' proposals for a new reception and security building at the north end of Cromwell Green.—[Vernon Coaker.]

Hon. Members: Object.

NOMINATION OF SELECT COMMITTEES

Motion made,
	That the Standing Orders be amended as follows:
	(1) In Standing Order No. 15 (Exempted business), line 18, leave out from 'committees' to 'which' in line 20 and insert 'to which that paragraph applies'.
	(2) In Standing Order No. 121 (Nomination of select committees), line 10, leave out from 'under' to ', or' in line 13 and insert 'the Standing Orders of this House (with the exception of the Liaison Committee, the Committee of Selection, the Committee on Standards and Privileges and any Committee established under a temporary Standing Order).'—[Vernon Coaker.]

Hon. Members: Object.

ANTISOCIAL BEHAVIOUR (CAMBRIDGE)

Motion made, and Question proposed, That this House do now adjourn.—[Vernon Coaker.]

Anne Campbell: I am grateful to have secured the debate. Antisocial behaviour is of grave concern to many of my constituents. I am pleased to have the opportunity to air those concerns publicly.
	For some time, I and Labour councillors in Cambridge have been working hard with the police and council officers to try to combat some of the worst effects of antisocial behaviour. We have had moderate success in the Arbury area, where I worked with councillors such as Mike Todd-Jones and Ian Kidman to identify locations where drug dealing was taking place and, in one case, where a council flat was being used for prostitution. That has now stopped, which has brought some relief to my long-suffering constituents. However, there are other locations in the city where drug dealing is taking place, and the problems still need to be tackled.
	Earlier today, I heard about a number of massage parlours in the city that are being used as brothels. They cause immense nuisance and intimidation to residents living nearby. I regret that the police find it difficult to collect the evidence necessary to close them down.
	The Minister will be pleased to hear that I recently organised a big conversation event on antisocial behaviour in Kings Hedges, an area of the city that has been blighted by antisocial encroachment in recent months. Residents tell me that they want quite simple improvements such as lists of telephone numbers so that they know how to report antisocial behaviour easily. They want street lights repaired promptly. They also want broken glass swept up quickly so that it does not become a hazard to children and animals. In addition, they want a sympathetic response from their local council housing office when they report noisy and antisocial neighbours.
	Residents warmly welcome the extra police officers, the new community police officers and the street wardens. They recognise that the Government's antisocial behaviour legislation can lead to improvements in the quality of their lives. We have a good set of community beat managers in Cambridge, who do a magnificent job when they are allowed to get on with it. I have recently spoken to the chief constable of Cambridgeshire about the problems that occur when community beat managers are pulled out of their neighbourhood to other neighbourhoods to solve burglary and car crime incidents. I and Labour city councillors believe that community work that addresses antisocial behaviour has much more beneficial long-term effects.
	I single out for particular praise two local community beat officers—Constable Nick Percival and Constable Mark Rabel. Nick Percival was allocated to the East Chesterton ward in Cambridge as community beat manager about 18 months ago. The ward was experiencing severe problems with gangs of children breaking windows, starting fires and stealing cars. The area has been transformed. Nick is known by all the children in the area as PC Nick, and they like and respect him. Although the area is by no means problem free, it has become a much more pleasant place to live.
	A few months ago, PC Mark Rabel was appointed as an extra police officer—funded by the city council—specifically to deal with street-life people. He has served two antisocial behaviour orders for aggressive begging. He has spoken to and profiled 200 people living on the street in the city. He has made a number of arrests for aggressive and intimidating behaviour. The action taken by Mark has had a significant impact on one area of the city where aggressive begging and drug taking is a big problem. He has been hampered, however, by the city council's reluctance to implement appropriate legislation to deal with antisocial behaviour. Although there is an improvement in the situation, local residents and traders are concerned that with the return of the warmer weather and the lighter evenings, they will once again be plagued by large groups of aggressive street-life people drinking and shooting up outside their homes and businesses.
	Of course, many people who cause us such anguish have serious problems, and I am not unsympathetic to their plight. I have met the National Treatment Agency for Substance Misuse, which says that a drug addict can receive treatment within one week of making a request. In Cambridge, addicts have to make their way to the drugs centre on Mill road for supplies of methadone. I am told that that does not provide the same buzz as heroine and cocaine, so a top-up drink of Special Brew is often taken as well. Following my complaints, the police have prosecuted one shopkeeper who was selling Special Brew illegally, although the problem continues. I should be glad to hear from my hon. Friend whether there are plans for more alcohol rehabilitation centres, as that is a major issue, quite apart from drug rehabilitation. Another problem in Cambridge is that there is no wet centre where addicts could go to drink during the day or at night.
	Most street-life people have council flats, and accommodation can be found for those who have recently arrived in Cambridge by one of the excellent homelessness agencies in the city. Local people have always responded compassionately and sympathetically to the problems of homelessness but compassion has been eroded in recent months by sheer numbers and by the way in which groups collect regularly on street corners to drink, quarrel, shout abuse and inject themselves with drugs. There is also a problem with used needles, which are discarded in bushes and alleyways, and left at the roadside. Although there is still sympathy and willingness to help, local people believe that street-life people must behave in a way that is compatible with the needs of society and that much of their behaviour at present is simply unacceptable. There is also concern that because Cambridge is an attractive location, with no drinking ban in force, with many good agencies to support and counsel street-life people and with easy pickings for anyone prepared to beg, it is a target for street-life people. Certainly, numbers have increased markedly on those of a year ago.
	In October, I was invited to attend a meeting organised by former superintendent John Fuller, who had been brought out of retirement by the Cambridgeshire police to tackle the specific problems of antisocial behaviour in three different areas of the city. There were about 90 residents and traders at that meeting, all very angry about drinking and aggressive begging in Mill road, a problem that had arisen since the police decided to get tough with people begging in the city centre. Several arrests had been made in the city centre, which had displaced the problem to Mill road and Mitcham's corner.
	At that meeting, I launched a petition asking for a city-wide designated public places order to be put in place. We asked for a city-wide order, not realising the full extent of the legislation at the time, to try to stop the displacement from the city centre into Mill road and Mitcham's corner. It is obvious that many of my constituents agreed, because in a short time, we had more than 2,000 signatures. Labour city councillors called for a special meeting of the city council on 19 November to discuss the matter.
	I am sorry to report that the Liberal Democrat-controlled city council overruled Labour proposals for a designated public places order—DPPO—and decided instead to introduce its own byelaw. Its stated reasons were, first, that
	"a city-wide ban was preferable to action on specific streets",
	but was not possible with a DPPO. That is probably correct, and I hope that my hon. Friend will confirm that it is. The second reason, which I find rather surprising, was that the Liberal Democrats
	"regarded the DPPO powers as unacceptable in principle",
	and drew comparisons with the "sus" laws of the 1970s and 1980s. They referred to a particular case in Oxford in which they believed DPPOs had been applied inappropriately. The leader of Cambridge city council has referred to the Oxford example on numerous occasions, and cites the case of a young man celebrating his successful graduation by drinking champagne at a table outside a pub. It is claimed that he was told to stop drinking by the police because of the existence of a DPPO, which led the Liberal Democrat-controlled city council to believe that DPPOs are draconian, and that it is not necessary for people to behave in an antisocial way for the police to stop them drinking.
	At that meeting, Labour councillors pointed out that urgency was the most significant issue for people who were suffering from the antisocial effects of street drinking, and that the DPPO could be put in place before Christmas. They said that the debate about whether the ban should be city wide should not be used as an excuse for delay. I offered to meet Ministers with council leaders to discuss the way in which rapid progress could be made. In the meantime, on 17 December, I received from my hon. Friend the Minister a reply to a letter that I had sent her. She said:
	"While section 235 of the Local Government Act 1972 enables councils to make byelaws, this is not applicable where there are express provisions in other legislation to deal with the subject matter. It is therefore not an option for the council to make a byelaw dealing with the consumption of alcohol in public places."
	I passed that information on to the city council, and asked what it proposed to do. The answer was not very much, and three months later, when the Liberal Democrats appeared not to have made any progress and had not bothered to use my offer of assistance, I arranged to meet the Minister for Local and Regional Government on 4 February, along with council representatives. Councillor Ben Bradnack, acting Labour leader, and Councillor Catherine Smart, who stood in for council leader Ian Nimmo-Smith, attended that meeting, together with two city council officers. My right hon. Friend repeated the advice given to me by my hon. Friend the Minister, and explained that in Cambridge's case, the Criminal Justice and Police Act 2001 makes provision to tackle antisocial drinking in the form of a DPPO. He went on to say:
	"Indeed, the Council agree that a DPPO could be used to tackle the problem in areas like Mill Road where there is clear evidence of anti-social street drinking. In relation to those areas therefore it is simply not an option for the First Secretary of State to confirm a byelaw".
	Imagine my surprise, therefore, when I read in the local paper the next day that Councillor Catherine Smart had said that grave concerns remain over the DPPO and that she continued to favour a byelaw.
	Earlier today, I spoke to PC Paul Phillips, a police officer working in Oxford, where a DPPO was introduced 18 months ago. He said that the specific areas that had been causing problems were tackled first, and another section was bolted on later, so the DPPO now covers the whole central area of Oxford. He was very enthusiastic, and described it as a cracking piece of legislation. There has been a significant reduction in crime in the city since the DPPO has been in place. I have to report, however, that there is desperation about the issue in Cambridge. Residents associations in Petersfield, Romsey and West Chesterton are angry and frustrated at the delays. In just over four days, Labour councillors collected another 500 signatures for a petition requesting that the Liberal Democrat-controlled city council hold a special meeting to discuss a drinking ban. That meeting will take place on Thursday 11 March, and I hope that the council will be made to see sense.
	Before that meeting, however, it would be helpful if the Minister spelled out the answers to some of our questions. First, could a byelaw or DPPO be used in areas where the police believe that incidents of antisocial drinking may be displaced? Secondly, is it possible to use a byelaw in cases where a DPPO presents a viable alternative? Thirdly, is it possible for people to be arrested for drinking in a designated public place when they are not committing a nuisance to anyone else? Fourthly, what are the relative police powers under DPPOs and byelaws, and which would my hon. Friend consider preferable? Finally, will she give her views about the degree of responsibility of Liberal Democrat-controlled Cambridge city council and the council's prevarication? I should be grateful if my hon. Friend could advise me and the hundreds of people in my constituency who, I know, will be watching the debate.

Hazel Blears: I congratulate my hon. Friend the Member for Cambridge (Mrs. Campbell) on securing the debate, and commend her for organising the big conversation that took place in her constituency. It is vital that we not only listen to the concerns of our constituents, but are seen to be acting on those concerns and making a difference on the ground. I intend to deal with the issues that my hon. Friend raised in relation to street drinking. As she said, we have been in correspondence about the matter for some time, but first I shall say something about the background to the antisocial behaviour powers that the Government put on the statute book, and about the action plan and the Together campaign, which help to set the scene.
	Antisocial behaviour affects far too many people. It is true that the great majority of people behave in a way that does not cause alarm, harassment or distress to others, but in some communities there are a small number of people who do exactly the opposite. It is the norm for them to behave badly and to intimidate those around them. Consulting communities about these issues is vital to identify the problems that are damaging our public spaces, and to find solutions to help the community reclaim our towns, cities and rural areas.
	Antisocial behaviour issues recognise no limits. It is important that immediate action be taken to deal with problems such as begging, prostitution and street drinking. People want to be able to see and experience the difference it can make when the powers are used. It is important that that action should be incorporated in a wider long-term strategy to address problems on the streets and improve the environment.
	We need a new drive and new commitment to turn the words into action, and we need to do far more for the victims of antisocial behaviour. That is why the Prime Minister, the Home Secretary and I recently launched the Together campaign and an action plan to tackle antisocial behaviour. We are backing that plan with £75 million over the next three years. There will be an antisocial behaviour co-ordinator in every crime and disorder reduction partnership in the country. We want to make sure that there is a single point of contact to which the community can refer a range of antisocial behaviour issues that affect them.
	There will also be help and support for frontline practitioners—housing officers, environmental health officers, wardens, social workers and police officers—to help them tackle antisocial behaviour. We have just set up the Together academy, which will provide hands-on training for all the practitioners involved in dealing with these issues. We had the first regional event in Birmingham last week, which went extremely well. Over the next couple of months, we will train some 3,500 practitioners in how to use the new powers that the Government have put on the statute book.
	That is a key difference in relation to the legislation. We have not simply passed an Act and issued a traditional Government circular. We have the action plan and the academy staffed by expert practitioners who can advise people on how to use the powers, how to get the evidence and how to use the law. My hon. Friend raised some interesting issues about the law, particularly in relation to street drinking.
	As well as the academy, we have the action line—a telephone line staffed by experts, whom people can contact with their problems and get on-the-spot advice about how to take action. We have new powers to disperse groups. I understand that these powers are currently being considered in Cambridge. It is rather ironic that the local council administration, which is Liberal Democrat-controlled, is considering the dispersal powers, when those powers were opposed vigorously in Parliament by the Liberal Democrats as being far too much of an incursion into the civil liberties of people who choose to congregate in groups. Those powers of dispersal are important to enable communities to reclaim the streets from intimidation and antisocial behaviour. In the places where dispersal powers are used, both police and community support officers will have the power to disperse groups where their presence or behaviour has resulted, or is likely to result, in a member of the public being harassed, intimidated, alarmed or distressed.
	We have also brought in new powers to issue penalty notices for disorder to people making excessive noise and participating in drunken behaviour in the evening. Environmental health officers now have the power to shut down, with immediate effect, establishments that persistently create noise nuisance; and there is a new offence of selling spray paints to young people under 16, as well as more robust powers for local authorities to deal with fly-tipping, graffiti and fly-posting.
	I know that my hon. Friend is particularly concerned about street drinking. City and town centres should be clean and safe, and make everyone feel welcome in using the facilities that are available. People have a right to feel safe in their communities, and we simply cannot have situations in which people are afraid to use our public spaces and facilities such as cash points or shops because they feel threatened by individuals and groups hanging around. In too many areas, local surveys have shown us that large numbers of people are now reluctant to use their city centres and to go out and enjoy themselves, using the facilities, because of intimidation.
	The Criminal Justice and Police Act 2001 provides the police with a much more consistent set of powers, including the power of arrest, which was not available in the previous byelaws, for enforcing designated public places orders. The measures contained in the 2001 Act have been widely supported by local authorities, police and crime reduction agencies to tackle antisocial and under-age drinking, which is also an increasing problem, not least in the areas identified by local authorities where there has been evidence of alcohol-related nuisance. Since the introduction of those powers in September 2001, almost 100 authorities in England and Wales have introduced designated public places orders to tackle the problem, which makes me feel somewhat at a loss as to why the difficulties are so acute in Cambridge. Some 98 authorities have introduced the powers.
	I have written to my hon. Friend about Cambridge city council's proposal for a byelaw to control street drinking in Cambridge. As she said, under section 235 of the Local Government Act 1972, byelaws cannot be made for a purpose for which provision has already made under another enactment. I understand that that advice has been confirmed by my right hon. Friend the Minister for Local and Regional Government, in the Office of the Deputy Prime Minister.
	I would also draw to my hon. Friend's attention the provisions of section 15(3) of the Criminal Justice and Police Act 2001:
	"In so far as any byelaw made by a local authority and to which this subsection applies still has effect at the end of the period of 5 years beginning with the day on which this subsection comes into force, it shall cease to have effect at the end of that period in relation to any public place."
	In ordinary language, the provision means that where there was a byelaw purporting to regulate street drinking, it will have expired five years after the Act came into play. Clearly, the intention is to ensure that the legislation to designate public places is used in future instead of byelaws, which were traditionally a difficult, time-consuming and lengthy way for local authorities to proceed.
	I believe that the designated public places order legislation is providing an extremely useful tool for local authorities and the police. Unlike the old Home Office byelaw, the arrangements include a police power to confiscate alcohol from people who are drinking and causing a nuisance in a designated place. The police have the power to require a person in such a place not to drink alcohol there when the officer reasonably believes that the person is doing so, has done so or intends to do so. He can also require them to surrender any alcohol or alcohol containers in their possession. It is not an offence to drink alcohol in a designated public place, but failure to comply without reasonable excuse with an officer's requirements in respect of public drinking or surrender of alcohol is an arrestable offence.
	With the introduction of section 155 of the Licensing Act 2003, the confiscation powers now relate to both sealed and opened alcohol containers. The police find the power extremely useful, and I am sure that they would find it useful in Cambridge. I understand that local police would prefer to see a DPPO imposed, which would enable them to require people to stop drinking and to hand over any sealed or opened containers of drink, as that removes the problem, which is the alcohol. Rather than using the dispersal powers, the police can use a straightforward power to confiscate the alcohol and stop the problem quickly, which is what local residents want. My hon. Friend will be aware that a DPPO can be implemented within 28 days.
	My hon. Friend asked about alcohol rehabilitation centres. She will know that we have been working on the alcohol harm reduction strategy for some time, and publication is imminent. It will certainly deal with questions of treatment and referral. Wet centres are operating successfully in some areas. I recently designated a wet centre as a place to which the police can take drunken people rather than holding them in custody. That is a worthwhile use of such centres.
	My hon. Friend asked whether displacement could be taken into account in designating an area under a DPPO. I confirm that that is a relevant issue for local communities. Before designating an area, local authorities should make an assessment of all the areas to which nuisance or disorder may be displaced, ensuring that everyone affected by the designation is appropriately consulted. That is to allow consideration of the consequences of the order on a neighbouring authority. It might be appropriate for a local authority to designate an area beyond the site of the immediate problems caused by antisocial drinking if police evidence suggests that the existing problem may be displaced when the DPPO is in place. In that case, the designated area could include the area to which problems might be displaced.
	Again, the Office of the Deputy Prime Minister has offered assistance from officials in drafting the order, in the light of the experience of the other 98 authorities that are already operating the system successfully. Unfortunately, the offer has not so far been taken up, but it remains open.
	My hon. Friend asked whether someone could be arrested if they were drinking and no problem was caused. A constable may ask for the alcohol to be surrendered, and if someone refuses to do that without reasonable excuse, they can be arrested. Clearly, it will be for the courts to determine the facts.
	My hon. Friend mentioned the balance between using DPPOs and using the appropriate byelaw. The DPPO is a simple and straightforward piece of legislation, carrying strong arrest powers that have proved very useful. The powers under any byelaw would depend on how it was drafted and how it was interpreted. I hope that she feels that there is sufficient information for local people to decide on a way forward. The offer of assistance from officials remains open.
	I know that dispersal powers are being investigated in Cambridge. The police view is that the power of dispersal under section 30 of the Anti-social Behaviour Act 2003, while better than no power at all, would simply displace the problem to other areas, whereas the DPPO removes it entirely, by requiring people to cease drinking immediately and hand over their alcohol.
	It was right of my hon. Friend to raise this issue. The approach that I have outlined to tackle antisocial behaviour generally provides a good foundation on which to rebuild a civic culture of respect in our communities. We are absolutely committed to developing local people's skills and confidence to tackle the problem themselves and to reclaim local areas on behalf of the decent majority. In my view, too many people have put up with the problems of antisocial behaviour for far too long. It is time that we used the powers to tackle—
	The motion having been made after Ten o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
	Adjourned at twenty-six minutes to Eleven o'clock.